Fundamental analyisis $LINK: A beginner's guide to Chainlink ($LINK)
Fundamental analyisis Chainlink

Fundamental analyisis $LINK: A beginner's guide to Chainlink ($LINK)

By crypt0pian | cryptopian | 10 May 2021


This is a low threshold guide to the promising crypto-asset Chalinlink ($LINK).

Name Chainlink Coin LINK Market Capitalisation $ 21,496,552,479 Ranking on CoinMarketCap 11 Website Whitepaper Founding 2017 Founder Sergey Nazarov (CEO), Steve Ellis, Ari Juels ICO 32 million US-Dollar on 17.09.2017


1. What is Chainlink?

Getting reliable data on a decentralized blockchain in a non-centralized way is problematic. Shortly Chainlink is trying to solve this problem as a blockchain project that aims to bridge between payment services such as PayPal and Visa, banks such as HSBC and Wells Fargo, and blockchains such as Ethereum and Bitcoin. It was launched in 2015 and was presented to the public with the ERC-20 token, LINK, during the ICO token sale in 2017.




Chainlink is a decentralized Blockchain Oracle (expert) platform that can connect to real-world applications, data and an API. Chainlink was originally called SmartContract and aims to bridge the gap between Blockchain and legacy systems. Chain processing has smart contracts with parameters specified in a Service Level Agreement (SLA). Oracle collects data to prevent tampering, validates it, saves it on the Blockchain, and rewards Chainlink's native Ethereum token with LINK. Most importantly, it enables these data to be used in smart contracts.

Chainlink is currently on the Ethereum Blockchain and offers connection support to other Ethereum dApps. It will soon support more blockchains, as interoperability is the focus of the entire project.

Like Chainlink and Augur, Oracle is combining real-world data with Blockchain technology to open up new possibilities. Some believe this is the natural evolution of cryptocurrencies and smart contracts.


2. What is LINK?

Chainlink's token is called LINK, and the total supply of the cryptocurrency is limited to 1,000,000,000 LINK. At the time of writing the guide, the amount of LINK in circulation was 350,000,000.

Currently, the LINK price is trading at $ 50.77 US Dollars. LINK price reached its highest level so far at $ 20.12 on August 16, 2020.


3. How Does Chainlink Work?

Thanks to these contracts of Ethereum (ETH), which added a new value to the cryptocurrency ecosystem in 2015, offering smart contracts to the service of users, Blockchain is no longer a place where only financial transactions and data are recorded. Thanks to smart contracts, the use of Blockchain technology has expanded.

On the other hand, a smart contract was only capable of managing the data on the blockchain where it is located. In other words, Blockchain technology, which has the potential to serve the whole world, could not be used by many sectors in the world. Chainlink emerged to solve the problem right here.


Chainlink ensures that data in off-chain applications data repositories and similar sources are included in the process, that is, moved to the Blockchain. In short, it is possible to define Chainlink as a representative working between the real world and Blockchain. With this definition, Chainlik takes the data from the world and integrates it into the Blockchain and enables this data to be used in smart contracts.


4. Chainlink Properties

Chainlink's main focus is on working with smart contracts. Chainlink provides access to any external API you want to connect to the smart contract. Thus, it is possible to pay to any payment system or banking network through a contract.


ChainLink smart contracts serve three functions:

  • Reputation assessment: Users can use smart contracts with a range of parameters that include an oracle reputation called a service level agreement. Oracles who break the rules of the network and provide incorrect data will be punished and also be relegated. If the smart contract receives a sufficient number of applications, a service contract with ChainLink begins.
  • Working with external data: When off-line oracles are selected, they make a programmatic agreement and provide the requested data.
  • Gathering: As a third step, the aggregation contract collects all data transmitted by off-chain oracles and then averages them to create a weighted aggregate response.

In simple terms, Chainlink can be defined as a decentralized oracle network providing data.


ChainLink Oracle

Oracle are servers that will provide data. They are data providers of what is happening in the real world. Thanks to them, the data goes to the blockchain and the smart contract understands what is happening, draws conclusions and processes. For the process to be effective, you need to know that oracles are working honestly and that vendors are not cheating and providing accurate information.

ChainLink oracles can use datasets, APIs and other, almost any outside world resources. This will be useful for projects that need external data to work. ChainLink aims to be a bridge between traditional knowledge and blockchain, the technology of the future. Statistics to Oracle Nodes are always fully visible on Chainlink Oracle Reputation.


                                                Statistics to Oracle nodes fully visible on


5. Advantages of Chainlink 

  • Chainlink project provides compatibility between Bitcoin, Ethereum and also enables banks and payment services to be included in the system.
  • One of Chainlink's goals is to decentralize smart contracts. This is a step that will greatly increase the security and accuracy of information.
  • SmartContract, the backbone of Chainlink developers, has been dealing with contract automation since 2014.

Collaboration with the largest companies - Google Cloud, Oracle and SWIFT - gives confidence

  • LINK tokens are seen as an important investment tool by users, considering the technological capabilities and goals of the Chainlink project.


6. Disadvantages of Chainlink

For investors, there are few guarantees that the partnership will be long and efficient. Low development speed is shown as one of the big problems. It is not known how long it will take Chainlink to implement a real working solution that affects the execution of financial transactions. Moreover, there is no officially published roadmap that can be guided.

7. DeFi and Chainlink

Blockchains are basically designed as a closed system. They only rely on on-chain data that is already available on the blockchain. This ensures that decentralized consensus is maintained and cannot be manipulated. However, the use cases of the blockchain are extremely limited by this premise.

For example, price and interest data sets created outside of a blockchain (off-chain) that differ in value and format from different sources are not accessible. Additionally, data diversity makes it difficult for blockchains to obtain reliable data without compromising consensus reliability. So Chainlink is highly attractive to DeFI. In this context, the Chainlink team states:

                         “Given the realities of modern data and blockchain consensus, there is an urgent need for a standard bridge

                          between DeFi applications and off-chain data of all kinds. As discussed below, Chainlink is a standard yet

                          customizable protocol to enable DeFi to connect securely and reliably with off-chain sources. "

By using Chainlink, DeFi projects can increase the variety of products offered and make the market more attractive to players. In total, Chainlink lists four tangible benefits offered by Chainlink Oracle technology: Connectivity, data protection, as well as confidential and cost-effective data.

8. Conclusion

  • Chainlink solves the Oracle problem. Decentralized blockchains receive reliable data from the real world through Chainlink. This enables smart contracts to exploit their full potential, especially in the area of ​​digital financial services. Chainlink is already a central pillar of DApps in the decentralized finance area.

  • The technology and the crypto-economy is well thought out. There is a clear value proposition as to why LINK Tokens should be held in the longer term as a data provider, data recipient and investor.

  • Chainlink's smart contracts are open-source and so far secure. The potential market for Chainlink is huge and the competition in the decentralized area is low, in the centralized area much higher.

  • The number of partnerships is impressive, but also necessary to be able to offer enough data nodes. The team behind Chainlink regularly presents further developments on Github and still owns around 90% of the collected ICO funds, which can currently be totaled almost 1 billion US dollars due to the increase in value of the token. Lots of potential to drive the project forward.

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