The Chainlink oracle has established itself as an integral part of the crypto ecosystem in recent years. Intertwined with many decentralised finance (DeFi) protocols and other crypto projects, Chainlink offers a unique solution to bridging real world data with isolated blockchain networks.
Chainlink’s native token $LINK has recently experienced significant price action as the oracle plans to upgrade its staking features.
Various Chainlink price predictions are optimistic that the token can sustain this momentum and eventually reach new heights. But LINK has previously shown that it is vulnerable to volatility.
What is Chainlink?
Blockchains operate in isolated environments, where they are unable to access or interact with real world data. This decision ensures that the networks remain decentralised and are unable to be tampered with.
However, it is also a limitation. Smart contracts are unable to draw on information from the real world.
As one of the largest blockchain oracles, Chainlink has emerged as a solution to this challenge. An oracle is a mechanism that can access external data and relay it onto the blockchain.
Chainlink’s uniqueness lies in its decentralisation. Rather than depending on a single oracle, it uses a network of multiple oracles. This decentralisation approach minimizes potential data inaccuracies and security vulnerabilities.
Its CoinMarketCap page reads: “Through a decentralized oracle network, Chainlink allows blockchains to securely interact with external data feeds, events and payment methods, providing the critical off-chain information needed by complex smart contracts to become the dominant form of digital agreement.”
This decentralisation is also evident in the oracle’s organisational structure. It is “driven by a large open-source community of data providers, node operators, smart contract developers, researchers, security auditors and more”.
Case study: Aave
Decentralized finance protocol Aave is one of the many crypto projects to have integrated Chainlink’s oracle network for its data needs. Aave’s protocol revolves around algorithmic interest rates for lending and borrowing, which is heavily reliant on precise market data.
Aave primarily uses Chainlink to access accurate, real-time price feeds for various cryptocurrencies supported on the platform.
By incorporating Chainlink, Aave sources its price data from several data aggregators, enhancing data reliability and minimizing risks associated with price manipulation or isolated data inaccuracies. This integration aims to bolster the security and efficiency of Aave’s lending and borrowing mechanics.
The LINK token
Chainlink’s network is supported by LINK, the native token that plays a pivotal role in the ecosystem. It’s not just a medium of exchange or a speculative asset but serves practical purposes.
Node operators in the Chainlink network, who fetch and verify data from external sources, are compensated in LINK tokens for their services. This establishes a direct incentive for these operators to maintain accuracy and timeliness in data retrieval and transmission.
The token is also utilised to ensure the continuous availability and security of data sources.
The oracle dates back to 2014 when Sergey Nazarov, co-founder and CEO of Chainlink Labs, launched an early iteration called SmartContract.com. This focused on bridging external data with blockchains.
However, the idea of Chainlink was fully formed in 2017, where it was officially introduced as a decentralized oracle network, building on the work of SmartContract.com.
The Chainlink whitepaper was released the same year, detailing the architecture and purpose of decentralized oracles. Alongside this whitepaper, Chainlink conducted its initial coin offering (ICO) of LINK in September. It raised a total of $32million.
Launching at the $0.18 mark in September 2017, LINK has faced much of the volatility of the crypto market in recent years. It has been especially affected by market swings as its oracle is intertwined with many of the projects dominating the crypto space.
After its initial few years stagnant around the same price point, LINK began to take off in 2019 after its mainnet went live on Ethereum. It was a big year for the oracle, with Google Cloud announcing plans to integrate Chainlink with its services. The crypto project also rapidly grew its crypto partnerships, with various DeFi protocols integrating its oracles for price feed data.
LINK closed the year off near the $1.90 level and its price continued to climb into 2020.
It was another active year for the oracle. Chainlink 2.0, the next iteration of its whitepaper, was announced, focusing on a more expansive vision for decentralized oracle networks. The project also further diversified its data sources and integrated with other blockchains including Polkadot.
In August, LINK climbed to a new all-time high of $16.92. While its price ultimately corrected and settled at the $10 mark for the rest of 2020, the following year was even more bullish for the oracle.
Throughout 2021, Chainlink expanded its range of decentralized price feeds, catering to a wider variety of assets and DeFi projects. These feeds serve as reliable price reference data for smart contracts.
LINK also profited from the broader bullish market at the time. It rocketed to its all-time high of $52.88 on 10 May.
However, it eventually corrected and succumbed to the bear market. It closed 2021 just below the $20 mark.
With the collapse of the Terra ecosystem causing havoc on the crypto market, LINK continued to plummet in 2022. By the end of the year, it had found support between $5 and $6, where it roughly stayed until October 2023.
Recent Chainlink news
From 20 October, Chainlink’s native LINK token witnessed a major price increase of 61.3%, climbing to a high of $11.78. This marked its most substantial value since May 2022.
Several factors have likely influenced LINK’s significant price rises relative to other cryptocurrencies.
A standout catalyst is the recent news regarding Chainlink’s native staking upgrade, which is gearing up to launch in the upcoming months.
The anticipated staking update is expected to bring enhanced features, including more accessible withdrawals, bolstered security measures, and adjustable rewards.
This announcement was well received by the community, with the initial staking pool reaching its capacity in under three hours.
As of 3 November, LINK is trading at $11.10. While it is down 1.45% in the past 24 hours, it is up 46.13% in the previous 30 days.
Chainlink price prediction
While Chainlink crypto price predictions vary depending on the source, there are many offering a favorable outlook for the cryptocurrency.
CoinCodex’s LINK coin price prediction says “it is currently profitable to invest in Chainlink”. A total of 21 technical indicators pointed towards buying, while 12 indicated sell. The site’s Chainlink price prediction for 2023 said it will climb to $11.52 in five days time and $13.89 in a month.
Gov Capital was similarly bullish with its more long term Chainlink crypto price prediction. It predicted Chainlink to eventually reach new highs. Its Chainlink price prediction for 2024 suggested the token to hit $27.34 in a year’s time. Within five years time, the LINK crypto price prediction said it could rocket to $119.67.
The forecast from PricePrediction gave another positive outlook. Its LINK price prediction for 2024 said it will average out at $12.47. It expected the oracle token to continue climbing and hit $18.65 in 2025. Its LINK price prediction for 2030 anticipated an average price of $127.99.
Finally, the Chainlink crypto price prediction from DigitalCoinPrice expected the token rocket to an average price of $23.10 this year. This trajectory is expected to continue.
Its Chainlink price prediction for 2025 said it could reach $37.02 and climb to $49.36 the following year. The Chainlink price prediction for 2030 suggested a new all-time high of $111.97.
Should I invest in Chainlink?
It depends. Chainlink price predictions are fairly positive with the likes of DigitalCoinPrice and Gov Capital anticipating new all-time highs. However, the cryptocurrency market is known for its volatility and you should never invest more than you can afford to lose.
Is Chainlink a good investment?
Chainlink was founded in 2017 and has become one of the largest crypto oracles in the industry. While its LINK token saw success with the bull market in 2021, it was also vulnerable to the recent crypto winter. Investors should be cautious and always conduct thorough due diligence.
Disclaimer: The information provided in this article is for informational and educational purposes only and should not be construed as financial advice. CoinNews and its authors are not financial advisors or experts. We recommend that you consult a professional financial advisor or conduct thorough research before making any investment decisions. Cryptocurrency investments carry a high degree of risk, and you should only invest an amount you are willing to lose. The opinions expressed in this article are those of the author and do not necessarily reflect the views of CoinNews or its affiliates.