Bitcoin

Is Chainlink (LINK) a bubble? Chain and DeFi data indicate something else

On July 13, Chainlink (LINK) recovered more than 34% to hit a new all-time high of $ 8.48. Since then, the price has been revised back to $ 7. But at the moment, Altcoin is making a new attempt to break its recent record high.

LINK recovered by 167% in 2020 and remains one of the best in the cryptocurrency market. However, this is not the first time that it has received this description. In 2019 Altcoin recovered 1.81% and according to CoinMarketCapThe return on investment for those who bought at the first listed price now exceeds 5,000%.

Data recently from Santiment, a blockchain analytics company, found that LINK investors have an average return of 64% and cryptocurrency is currently high on Santiment’s list of emerging trends.

LINK is in a bubble phase?

Is Chainlink (LINK) a bubble? Chain and DeFi data indicate something else
Is Chainlink (LINK) a bubble? Chain and DeFi data indicate something else

After such a strong recovery from LINK, Investors will wonder if the asset is in a bubble or not. Since the price of Bitcoin fell to $ 3,750 on March 12 Several altcoins, particularly in connection with the DeFi market, recorded double-digit and three-digit increases.

The price development of LINK and other cryptocurrencies has convinced some investors that a new season of altcoins has started. However, it is important to take a closer look at the basics SHORTCUT see whether the run is controlled by FOMO or a combination of more basic factors.

CoinMetrics he showed that different point data support the LINK price. For example, The total number of active addresses and the number of transactions have increased. This is tantamount to the number of people they have and, more importantly, the use of LINK has increased.

Active addresses and the number of LINK transactions

Active addresses and the number of LINK transactions. Source: CoinMetrics

The number of companies (companies, investors, node operators) that deal with Chainlink at a lower level is also increasing. Follow in Binance’s footsteps Huobi Exchange has started to run a node to make your price data available to the network.

Even in June, China’s blockchain service network has been integrated into Chainlink and now operates 135 nodes.

These nodes (or oracles) are important because they feed information from the outside into smart contracts that enable multiple applications within the DeFi area. To be an oracle, users need to set a certain amount of LINK that can be lost as a penalty for providing inaccurate information.

In exchange for their efforts Oracle operators are rewarded with LINK tokens.

Chainlink lawsuit is operated by DeFi

While Chainlink’s chain activity and increasing number of nodes indicate healthy network growth, other forces may be involved. For example, There has been a growing demand for DeFi-enabled coins like LINK, because they focus the greatest interest of the yield farmers who maintain interest in protocols like Aave.

Decentralized financial protocols (DeFi) can have a major impact on other cryptocurrencies. Take for example The Basic Attention Token (BAT), which rebounded to nearly $ 0.31 from June 19 to July 2 and saw almost record-breaking growth in trading volume as most of its outstanding offering was tied up in compound. This happened because of the reward mechanism of Compound made BAT the most used ERC-20 token in DeFi, as COMP tokens were awarded based on interest generated by borrowed BAT tokens.

As the DeFi sector continues to grow, so does the need for reliable and decentralized oracles that can supply intelligent contracts with external information. This enables applications DeFi, like insurance and gambling, be safer and more reliable.

If there is a greater demand for DeFi tokens, this could help to control the LINK price much more directly, especially given the fact that the oracles have to use the LINK in order to participate in the network.

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