Chainlink has been successful in the market, but what explains it? Check below some of the factors that help you understand how the Chainlink token soared more than 536% in 2020.
The first reason has to do with the crypto ecosystem and its blockchains. Smart contracts rely on real-world information to complete their operations. Financial contracts need market data, while insurance ones need the information to decide on payment policies.
Chainlik and the oracles connect real-world data to blockchains
However, Blockchains have no connection to this real world, and this much-needed information is not available on the blockchain. Therefore, it is necessary to resort to an oracle service, which bridges the information and the network. And it is at this point that Chainlink acts, collecting, formatting, validating, and distributing information.
Another reason for Chainlink’s success is to offer solutions for one of the markets’ “darlings”: the DeFi (decentralized finance). The company’s network promises to deliver high-quality price feeds, “expanding DeFi growth”.
Besides, it says that its data is collected broadly with “rigorous validation” before allowing contracts to get into action. Thus it is possible to monitor several currency pairs in a decentralized way.
Solana, FTX’s network, is among Chainlink’s partners
The node operators are those responsible for assisting in data collection and validation. And this is where Chainlink’s token, the Link, comes into play to reward these operators’ work.
Among the companies that use Chainlink are big names in the market, such as Aave, Synthetix, and Yearn.finance. However, it is not restricted to the crypto world: one of its partners is Google, the search giant.
Another relevant partner is Solana, FTX’s blockchain that is a faster and cheaper alternative to Ethereum. In March 2020, Solana announced that Chainlink would be the network oracle solution and the standard for all Solana dapps (decentralized applications).