The blockchain project Chainlink connects smart contracts with real-world data, monopolizing the oracle market. The need for smart contracts and oracles is interconnected, so whichever smart contract blockchain succeeds will likely lead to Chainlink’s growth.
By themselves, smart contracts are fairly basic. Unlike web or computer applications, they have no access to data from the real world and are limited to data that exists on the blockchain. This may be sufficient for simple use cases, such as smart contract escrow accounts, but it becomes impossible to create more complex use cases.
Blockchain oracles solve this problem, allowing smart contracts to efficiently retrieve data from the outside world for use in contracts. Oracles obtain specific data by asking information from many different sources, such as cryptocurrency prices from Coinmarketcap and Coingecko. They then average these data and feed it to the smart contract to ensure accurate results. All different types of data, including price information, sports scores, random numbers, and even weather information can be obtained and used in blockchain applications, which opens up a whole new world of smart contracts.
Chainlink is the earliest and largest blockchain oracle project. It was created by Sergey Nazarov and Steve Ellis in 2017 as a way to connect on-chain and off-chain data. Since then, it has grown to effectively monopolize the smart contract ecosystem and is now used to secure over $76 billion in on-chain value and is integrated in over 1,000 projects. Almost every smart contract platform can integrate with Chainlink, including Ethereum, Avalanche, Solana, Cardano, Polygon, Polkadot, and Cosmos. They also have quality companies that feed their oracles with data, like the Associated Press and AccuWeather, working with giants like Amazon Web Services. In the cryptocurrency development world, Chainlink may become synonymous with oracles.
In order to access Chainlink’s data, smart contracts need to pay in LINK, which is then appropriately distributed to data providers. This naturally means that as the demand for smart contracts and data increases, so will the demand for LINK tokens.
One of Chainlink’s biggest problems right now is the lack of incentive to hold LINK tokens. Once LINK is purchased for use in smart contracts and sent to data providers, they have no incentive to hold it and then sell it for profit. As such, the price of LINK is currently quite speculative. Fortunately, Chainlink plans to introduce a staking model for suppliers sometime in 2022. This will allow suppliers to earn yield on their LINK, thereby incentivizing to hold their LINK, ultimately reducing supply and increasing demand, leading to higher prices. Unfortunately, staking may not be available to the public, but that could change if they choose to create some kind of delegation model.
While Chainlink hasn’t seen the same exciting price action as other coins, it has a necessary use case and isn’t going away anytime soon. With its monopoly on blockchain oracles, the success of any smart contract platform means the success of LINK, and staking will further increase demand for the token. Staking on Chainlink is actually a bet on the future of the blockchain, which is more secure than betting on a specific smart contract platform.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/can-chainlink-be-the-safest-cryptocurrency/
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