Bitcoin

The Chainlink utility controls the LINK price, but a fix may occur

Chainlink’s Token LINK is again one of the most discussed altcoins, with an increase of over 370% this year. In July alone, the ninth-largest cryptocurrency by market capitalization grew by almost 80%, with blockchain analysis company Santiment identifying LINK as its top-ranked emerging cryptocurrency.

Amid the price gains from SHORTCUT, It was spoken by one New high season, especially for altcoins in connection with the currently booming decentralized financial market. As the DeFi market continues to grow significantly, The need for decentralized oracles for intelligent contract protocols such as those offered by Chainlink is becoming even more important.

On the other side of the conversation Critics argue that the LINK price hike is just a speculative bubble fueled by the fear of loss (FOMO). Despite the increasing benefits of Chainlink oracle solutions, Some experts point this out DeFi protocols that develop their own internal oracles are the death sentence for the Chainlink utility.

The Chainlink utility controls the LINK price, but a fix may occur
The Chainlink utility controls the LINK price, but a fix may occur

Some commentators say Altcoins tokens could be preparing to make significant profits as Bitcoin (BTC) continues its limited reach. Since peaking at 67% in mid-May, BTC’s market cap dominance has declined slightly due to price increases for several large altcoin tokens.

How Chainlink works

A blockchain as an autonomous network should theoretically offer robust immutability. This makes it difficult to manipulate data. To the If a dishonest actor changed the records stored in a decentralized recording book, he would need a lot of computing power. That’s where the new technology came from with the creation of Bitcoin over a decade ago, Several other networks have gone online offers various functions. Nowadays it is common for organizations and even governments to talk about it Create blockchain-based solutions for your business.

If these blockchains have a technical value, this is a discussion for another time. Provided they do, theirs The implicit decentralization only exists in isolation within the limits of your network. Every interaction with Data from another blockchain or a “real” service often requires a centralized middleware. Contaminated data from these third party sources The fidelity of blockchain data is effectively removed.

So, The idea of ‚Äč‚Äčcentralized oracles doesn’t match the decentralized spirit of blockchain functionality. Oracle are mediators who convert data from off-chain sources into intelligent on-chain contracts and vice versa.

Chainlink is one of these projects that enables the secure and reliable decentralization of oracles through a network of nodes that are responsible for providing accurate information for smart chain contracts. The decentralized oracle of Chain link consists Data buyers and the first and last information requestors act as secure data providers. Instead of communicating with centralized services for external data, Blockchain networks only have to interact with Chainlink oracles. providers Bet LINK, the network’s native token Chain link, to the Bid for information requests from buyers.

For example, when a data buyer sends a query for something like the weather forecast, the Chainlink log records that query as an “event” and creates a Service Level Agreement (SLA). He SLA is done by Three basic smart sub-contracts: a reputation contract, an order reconciliation contract, and an aggregation contract.

The reputation contract tracks Oracle metrics, while the order matching contract examines offers from participating nodes based on the parameters defined by the data buyer. In the last step of SLA, The aggregation contract gathers the information provided by the nodes to determine which ones are best suited to fulfill the event. So, the aggregation contract It involves three main steps: choosing the best oracle, reporting the data, and collecting the results. Aggregation contract data also offer Updated Oracle metrics for future reference.

The DeFi connection

Cointelegraph reported in mid-June Chainlink’s price oracles dominated the DeFi space with protocols such as the Kyber network, which integrated Chainlink’s pricing data into its token exchange market. For an emerging sector of the crypto market like DeFi, Chainlink should theoretically offer improved connectivity, reliable price data, higher computing power and robust privacy. Given the wide applicability of the DeFi sector Decentralized Oracle services are a must. how Some projects have already developed Your own internal solutions.

Indeed, off-chain access to secure and reliable data is often the downfall of many decentralized applications. DeFi apps can hardly work with data that is only available for their native strings and often require access to business systems, web APIs, and payment systems, among other things. DeFi protocols You work with intelligent contracts whose settlement largely depends of different types of data outside the chain. Offer chain link oracle Access to these business backend systems for executing DeFi projects.

By interacting with various DeFi protocols Oracle networks like Chainlink can also offer custom records. How Aggregated price indices for important cryptographies such as BTC, Ether (ETH) and Tether (USDT). Instead of DeFi loans or a money market Create and maintain prices that require constant updates Protocols can interact with this oracle of decentralized prices.

Data calculation is also another problem for DeFi and DApps protocols in general. Any process that requires The entry of two or more nodes or oracles means multiple gas rates that have a negative impact on the practicality of the network. Decentralized oracle networks like Chainlink should theoretically Offer inexpensive data calculations across channels such as threshold signatures, which should limit transaction gas costs. Part of this cost-effective data calculation occurs outside the chain within reliable hardware This allows the nodes in a “Black box ecosystem”. Reduce the volume of chain transactions while maintaining security logs This is one of the ways to increase blockchain scalability.

On the privacy side of things, Chainlink offers solutions like “Mixicles”, An Oracle mixer that eliminates the correlation between the pros and cons of smart contracts. This process does it It is difficult for any observer in the chain to reconcile a smart contract with his contribution. Blends can provide the privacy needed to protect things as needed Business strategies, internal positions, etc. of dishonest actors who want to steal such data. The system works similarly Mixer for crypto payments.

The ninth largest cryptocurrency by market cap

LINK’s 80% price increase in July alone made Chainlink’s native token the ninth-placed cryptocurrency by market cap. But, as is so often the case, observers generally debate when there is an increase if the current price campaign is controlled by FOMO. To the Konstantin Anissimov, CEO of Cryptocurrency Exchange CEX.IO, LINK’s upward momentum is the result of initial retail interest driving the market, followed by whales trying to take advantage of the token. Anissimov pointed this out to Cointelegraph Chainlink network activity increased by 200% as soon as the token recovered from its decline in mid-March:

As soon as the decentralized Oracle token reached higher highs, investors rushed to the stock exchanges to participate in the price action. However, on July 13, there was a significant increase in the number of large LINK transactions, suggesting that the whales came on the market at that time. Around 300 large transactions were registered on this day alone, an increase of 1,011% since July 11. It looks like the Chainlink whales could give the final boost from $ 6 to almost $ 9. “

In fact, as identified earlier, Three key figures in the chain, including a significant increase in the number of active addresses, explain the positive price movement for LINK. The service network in June China’s blockchain was integrated into the project and supposedly It runs at over 135 knots.

However, some critics say this LINK’s meteoric price rise is not due to the increasing usefulness of the Altcoin token. in the a document now eliminated, the little-known asset management company, Zeus Capital, ranked recent earnings as the result of a sophisticated chainlink pumping and discharging scheme.

Amid the litany of fraudulent activities attributed to the chainlink hierarchy in the 66-page document, The alleged asset management company described the project as the “Crypto Wirecard”. However, it is important to note Zeus Capital holds a short position aiming for a 99% drop in price for LINK.

After a Tweet by TheLinkMarine, a defender of Chainlink, The Zeus Capital report is meant to lead to a manager in the Nexo loan log. Meanwhile, Nexo borrowed 350,000 LINK from DeFi credit market Aave just two days before publication of the document. This alleged connection between the document editor and nexo questions the correctness of the information given in the report. Excerpts from the piece that Cointelegraph saw before it was removed asked readers to shorten LINK in Aave.

Possible LINK acceptance and what about XTZ?

Aside from short sellers who lower Chainlink, There are signs that LINK could see a significant decline. In a conversation with Cointelegraph, Thor Chan, the CEO of AAX, a cryptocurrency exchange, said: “If we look closely at the LINK / USD price charts, we can see that the RSI has reached the overbought level and has historically led to some sharp price cuts with LINK.” Anissimov also shared a similar feeling claims that LINK has entered the overbought zone and adds that:

“Different sales signals appear within different periods, e.g. B. the 3-day, 1-day and 12-hour charts. These bearish formations indicate that Chainlink may be forced to develop bearish dynamics. However, LINK is currently in pricing mode. A correction period that could lead to the $ 5 support level being retested is likely to resume its upward trend and reach new highs. “

As Cointelegraph previously reported, LINK and Tezos (XTZ) often move together. In July, XTZ also reflected the LINK result. to have increased by 35% since the beginning of the month. Since alts such as XTZ and Cardano (ADA) are experiencing significant upward trends, the discussion about another high season has gained some momentum.

Anissimov noticed, however the relatively high domain of BTC as an argument against the beginning of every ongoing revival of old coins, claim that only if BTC falls below 60%, will recognize the beginning of a season of old coins: “During the past high season, BTC’s dominance fell from 95% to 61.5% over a two-month period between March and May 2017, to 50% two months later, and reached 35% in January 2018” “

While Bitcoin remains tight in the $ 9,000 to $ 9,200 range. Altcoins like LINK, XTZ, and ADA may see significant upside potential as investors look for a quick profit. However, the FOMO created by this sudden bullish progress often sees this Altcoin tokens quickly reach massive overbought levels. At such points, it is likely that These tokens see a form of bearish divergence between their spot price movement and the relative strength index. What follows next is often A massive retreat that is almost as big as the previous upward trend.

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