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Blockchain oracle network Chainlink’s native token LINK has been unable to reverse its 15-month slump, with the cryptocurrency bear market of 2022 aggravating its prolonged sell-off.
Since hitting an all-time high of about $52 in May 2021, the LINK token has fallen over 85% from its peak and was trading below the $7 mark as of 31 August 2022.
The Chainlink faithful, known as the ‘LINK marines’ on Twitter, will be hoping that the introduction of staking on Chainlink will help the data-providing network kickstart its next phase of growth. Additionally, the oracle has continued to see integration of its services across various blockchain networks including Ethereum (ETH), Polygon (MATIC) and BNB Chain (BNB) in 2022.
Let’s dive deep into learning about Chainlink and its native token LINK. You will also find important network updates and Chainlink price predictions for 2022 and beyond.
About Chainlink: Market leader of decentralised oracles
Chainlink is a network of decentralised oracles or data providers that relay information to enable smart contracts to execute, based on inputs and outputs from the real world.
The network was founded by Sergey Nazarov and Steve Ellis in 2017. It has established itself as the market leader in the blockchain oracle sector.
About three years after publishing its original whitepaper, the network released an updated version for Chainlink 2.0 in April 2021 to drive its next phase of growth.
The Chainlink 2.0 whitepaper said the oracle network would focus on creating multiple decentralised oracle networks (DONs), which consist of a collection of nodes (computing devices).
DONs work to transfer data bidirectionally to and fro from existing blockchains, and “enforce correct oracle reports and arbitrate off-chain oracle disputes”. With DONs, Chainlink nodes can create custom oracle networks that support smart contracts on a target blockchain or on a main chain.
“DONs are formed by committees of oracle nodes that cooperate to fulfil a specific job or choose to establish a long-lived relationship in order to provide persistent services to clients,” said Chainlink.
News agency the Associated Press, weather data firm AccuWeather, telecoms firm Swisscom and cloud services providers Amazon Web Services and Google Cloud Platform have already launched oracle nodes on Chainlink.
What is your sentiment on LINK/USD?
Next phase: Chainlink staking
Chainlink announced the roadmap to its LINK staking mechanism in June 2022. According to a press release, staking of LINK is projected to start later this year with the initial v0.1 release.
The v0.1 release will introduce a “reputation framework and staker alerting system” where LINK stakers will have the opportunity to get rewards on successfully detecting oracle networks that do not meet obligations outlined in Chainlink’s on-chain service-level agreement (SLA).
It will also feature additional functionality, such as stake slashing to promote quality and security, and distribute a portion of network user fees to LINK stakers.
The v2 version will explore a loss protection service, which will protect “participating sponsors when a supported oracle network deviates from its SLA”. Loss protection could become a source of rewards to LINK stakers in addition to staking rewards and network user fees.
According to Chainlink, staking will evolve into a key mechanism for node operators who want to “gain access to higher-value jobs and more fee opportunities in the Chainlink Network” due to “a reputation- and stake-based node selection mechanism”.
It should be noted that a form of collaterisation similar to staking already exists on Chainlink, where node operators can choose to deposit their LINK tokens as collateral to insure data delivery services.
Tokenomics: What is LINK token?
Chainlink’s native token LINK is used to pay Chainlink node operators for data used in smart contracts, for formatting of data into blockchain readable formats, for off-chain computation and for uptime guarantees provided by operators.
LINK is an Ethereum-based ERC677 token that “inherits functionality from the ERC20 token standard and allows token transfers to contain a data payload,” Chainlink said.
According to crypto research firm Messari, LINK token offering launched in September 2017 with a pre-sale offering price of $0.09 per token along with a 20% bonus depending on the time of the investor’s participation.
A LINK public sale followed at a unit price of $0.11. The two sales distributed about 350 million LINK tokens.
LINK has a maximum supply of one billion tokens. The token allocation is as follows:
- Initial token sales investors received 35% of maximum supply
- Node operators and reward incentives were allocated 35% of maximum supply
- Chainlink’s parent company SmartContracts.com received remaining 30% of LINK’s maximum supply.
Data on Etherscan showed that the top 15 LINK-holding addresses were linked to smart contracts. According to data compiled by blockchain research firm Messari, over 563 million LINK tokens were locked in smart contracts on 31 August 2022.
The largest non-smart contract LINK-holding address was linked to crypto exchange Binance, which held over 3.1% of the total LINK supply as of 31 August 2022. The second largest non-smart contract LINK-holding address remained anonymous, and held about 2.5 % of the total LINK supply.
Meanwhile, CoinMarketCap data showed the circulating supply of LINK stood at about 491.5 million on 31 August 2022. Chainlink was the 25th largest cryptocurrency network with a market capitalisation of over $3.3bn.
Price analysis: 15-month slump of LINK
In the past three years, LINK has gained more than 300%, up from about $1.80 to its current price of about $6.80 on 31 August 2022.
2020 was one of LINK’s best years in terms of price appreciation, as the token gained over 1,000%. LINK extended its gains into 2021 and surged to an all-time high of $52.88 on 10 May 2021. But LINK saw intense selling pressure after its all-time high and lost over 60% in the rest of 2021. The token closed the year at $19.50.
LINK’s losses have continued into 2022. The token has posted six monthly losses in the first eight months of 2022, taking its year-to-date losses to over 65% as of 31 August 2022.
In June 2022, LINK fell to a near two-year low of $5.30. The token rebounded in July and added 22% to its value during the month. As of 31 August 2022, LINK was trading at $6.80, about 87% below its all-time high.
Data from IntoTheBlock showed 84% of LINK holders were holding their tokens at a loss on 31August 2022, while 70% of LINK holders had held their tokens for over a year.
News: Important Chainlink updates
- Open Earth Foundation received a Chainlink Grant on 15 July 2022 to develop an oracle node that delivers open-access integrated assessment models for carbon pricing.
- Chainlink announced multiple integrations of its services across various chains and protocols in July 2022. These included Ethereum layer-2 Optimism, Solana NFT marketplace Solanart and Cardano-based DeFi network COTI, among others.
- Chainlink DON Hyphen made greenhouse gas flux data from European Union’s space programme Copernicus available to blockchains on 30 June.
- Analytics firm LexiNexis Legal & Professional launched a flight status data-tracking Chainlink node on 29 June 2022.
- Chainlink reported on 27 June 2022 that it has more than 1,000 oracle networks deployed across a number of blockchain networks
- Chainlink Foundation announced on 27 June 2022 that it expects not more than 5% of the total LINK supply, or 50 million LINK tokens, to be moved into circulation in the next nine months. The release of LINK tokens will support the staking launch and oracle network rewards.
- Chainlink announced its phased Chainlink Staking roadmap on 7 June 2022.
- On 4 August 2022, Chainlink announced seven new features to its Chainlink Keepers ecosystem, which are expected to help developers innovate faster, offload complex automation challenges off-chain to save money, and benefit from improved network security.
- In August 2022, the blockchain oracle reported about 71 integrations of its services across various blockchains including Ethereum, Polygon, BNB Chain, Avalanche, Fantom and more.
- Decentralised finance protocol Kyber Network announced on 18 August 2022 that its decentralised exchange aggregator Kyber Swap had integrated Chainlink price feeds on Arbitrum, Avalanche, BNB Chain, Ethereum, Optimism, and Polygon.
Forecast: Chainlink price prediction for 2022 and beyond
CoinCodex’s short-term Chainlink coin price prediction indicated that the token’s value could rise over 1% to $6.88 by 5 September 2022. CoinCodex’s one-month Chainlink price prediction on 31 August 2022 saw the token rising further to $9.98.
For the longer term, algorithm-based website WalletInvestor’s Chainlink crypto price prediction expected the token to trade at an average price of $0.515 by the end of 2022. WalletInvestor’s Chainlink price prediction for 2025 expected the token to trade at an average price of $0.25 by the end of that year.
DigitalCoinPrice was bullish about LINK’s price performance over the longer term. According to its Chainlink price prediction for 2030, DigitalCoinPrice expected the token to trade at an average price of $31.01 in 2030.
PricePrediction’s LINK price prediction on 31 August 2022 saw the token trading at about $60 in five years’ time.
Note that analyst and algorithm-based Chainlink price prediction can be wrong. Forecasts shouldn’t be used as a substitute for your own research.
Always conduct your own due diligence and remember that your decision to trade or invest should depend on your risk tolerance, expertise in the market, portfolio size and investment goals.
FAQs
Is Chainlink a good investment?
At the time of writing on 31 August 2022, Chainlink was the 25th largest cryptocurrency network with a market capitalisation of over $3.3bn. Its native LINK token has, however, fallen over 65% year-to-date.
Always conduct your own due diligence and remember that your decision to trade or invest should depend on your risk tolerance, expertise in the market, portfolio size and investment goals.
Will Chainlink go up?
DigitalCoinPrice was bullish about LINK’s price performance for the long term. According to its Chainlink price prediction for 2030, DigitalCoinPrice expected the token to trade at an average price of $31.01 in 2030.
Note that analyst and algorithm-based Chainlink price prediction can be wrong. Forecasts shouldn’t be used as a substitute for your own research.
Should I invest in Chainlink?
Always conduct your own due diligence and remember that cryptocurrencies are highly volatile. Your decision to trade or invest should depend on your risk tolerance, expertise in the market, portfolio size and investment goals. Never invest more than you can afford to lose.
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