Last year, LINK, the coin of the Chainlink project, rose 600% in price. Since the beginning of 2020, the coin has already grown by 10...
Last year, LINK, the coin of the Chainlink project, rose 600% in price. Since the beginning of 2020, the coin has already grown by 100%, having recovered in just a month after the market crash in March, and maintains an uptrend, outstripping BTC and other altcoins in growth rate. In the material, we understand the reasons for the rapid growth of LINK quotes this year.
LINK is one of the most profitable crypto assets in the last year and a half
Chainlink (LINK) is a coin of a decentralized oracle service built on top of the Ethereum blockchain. Since blockchains do not have access to data outside of their network, they need special programs - oracles (oracle), acting as a third-party source of information for smart contracts. Chainlink technology helps connect smart contracts to external resources in various networks using APIs. This is becoming more and more in demand in the market, therefore there is more and more attention to the project.
In September 2017, the project raised $ 32 million during the ICO. Then LINK price was $ 0.19. For three and a half years, the coin has risen in price 20 times - up to $ 3.50. At the time of the article's release, Chainlink's capitalization is $ 1.224 billion - 12th among all crypto projects on the market.
2018 was the year of both falling and rising prices for Chainlink coins. Having risen in price to $ 1.38 by the beginning of January, the asset switched to a downtrend, briefly replaced by small rises. Already in the summer of the year before last, LINK cost about $ 0.2.
However, 2019 was a triumphant year for the project - interest in the protocol has grown significantly. Throughout the year, the company entered into dozens of integrations of its oracle solution framework with a variety of organizations: crypto startups, large companies, data providers, node operators, ecosystem creators and others.
By the beginning of this year, Chainlink had over 100 partnerships. Source .
One of the main growth factors LINK has become a partnership with Google, concluded in June last year. The Google Cloud team has developed a way to build "hybrid blockchain / cloud applications" using Ethereum. After the news, the asset immediately rose in price by 50%. In the fall, the rate rose against the background of news about cooperation with the SWIFT payment system.
Thus, in the first half of last year, LINK was on the rise, having risen in price from $ 0.30 in January to $ 4.18 in June. In the second half of the year, the coin was stormy: the asset ended the year at the peak of its decline and was worth $ 1.82. Nevertheless LINK grew by 600% per annum - one of the best indicators of the last year.
Since the beginning of 2020, the coin has risen in price from $ 1.82 to $ 4.90 in early March, fell to $ 1.74 in mid-March, and then began to grow again, reaching $ 3.50 at the time of publication. Thus, LINK's profitability since the beginning of the year has made more than 100%, surpassing even BTC and ETH in this indicator. In a little over a month, the price rose again to the levels that preceded the March drop, which shows the interest from the buyers.
LINK price chart since the beginning of 2019 according to CoinMarketCap data. Source .
At the same time, in mid-March, LINK dropped to almost zero on some exchanges. The rapid recovery of the coin in just a month has led a number of users to believe that we are dealing with a dump. However, for LINK's growth, there are enough factors other than artificial ones. Let's understand them.
“Congratulations to all Chainlink & LINK holders, community members with strong hands who have amassed even more after the crash. We are recovering quickly! The demand is sky-high! LINK results are legendary, "trader and analyst Kevin Swenson tweeted.
Active project community
LINK is lucky with the community - the coin has a strong "fan base" constantly promoting or selling its favorite project. This, of course, has a positive effect on the price of the coin. A strong active community is always a good indicator of positive market trends.
According to The Block, the number of new users on Chainlink's network is growing by an average of 1,500 new addresses per day.
The graph of the growth of new users and active users of the Chainlink network. Source .
In total, the number of network users has grown from 82,000 to 125,000 since the beginning of the year. Chainlink continued to grow despite the financial chaos caused by the ongoing coronavirus pandemic and the fall of the crypto market in March this year.
Chainlink number of users. Green indicates the number of users, and black indicates the price of the coin. Source .
At the same time, the number of addresses that held the coin from one to twelve months is also steadily growing.
The number of addresses that held LINK from one to twelve months. Source .
The volume of daily trading increased several times compared to last year and almost 10 times since the beginning of the year.
LINK daily trading volume. Source .
As you can see, the coin has good indicators of investor confidence in the project. Brian Quinlivan, director of marketing and social media for Santiment, believes the growth of the network is one of the most accurate predictors of the coin's growth. He believes that network growth usually leads to higher prices, while declining network growth in most cases indicates a fall in value.
New Chainlink partnerships
Large companies also believe in Chainlink. Let's note a few of the main agreements this year.
In late March, Fantom, an open ledger company, announced the integration of Chainlink as its official oracle solution and pricing mechanism for the FTM token. The immediate focus of the integration is to create scalable DeFi products to support the financial system on Fantom: decentralized stablecoins, credit protocols, and decentralized applications. The company notes that Chainlink "excels in terms of safety, reliability and accuracy." In the future, both startups hope to expand DeFi use cases. The companies are confident that the synergy between Chainlink and Fantom will provide developers with the tools to take DeFi to the next level.
In early March, Chainlink announced that it is a member of the technical steering committee of The Baseline Protocol, an Ethereum protocol for the enterprise sector, launched by startup EY in partnership with Microsoft and ConsenSys . The product consists of procurement tools, business processes, supports smart contracts and tokenization. It should enable various companies to use Ethereum and the DeFi ecosystem for complex corporate processes without storing sensitive data on the public blockchain.
On April 6, blockchain platform Cypherium also announced its integration with Chainlink. The company's CEO, Sky Guo, commented that " Uncompromising on security, Chainlink is the ideal technology for Cypherium ."
On April 18, demand for LINK surged after US-based venture capital firm ParaFi Capital, backing popular DeFi platform MakerDAO, offered to secure the DAI stablecoin using LINK. The company noted that Chainlink has an “ attractive market cap, liquidity profile and appetite for speculation, ” which could help DAI maintain its peg to the US dollar. Among other advantages of the coin were mentioned decentralization, "kill-switch" functions (emergency disconnection from the Internet when the connection to the VPN server is broken) and "blacklisting" (drawing up a "black list").
The mid-April rally came amid the announcement of the LINK listing by Gemini. At the same time, Tyler Winklevoss, co-founder of Gemini, spoke positively about the asset, the development of the project and the community of its investors.
I appreciate the dedication of the LINK community. Their zeal and dedication remind me of the early Bitcoin and Ethereum communities. Unlike many other crypto communities, it is rallied around a project that has real perspectives and technical merit.
Chainlink becomes an important part of the DeFi industry
Chainlink's oracle solutions use lending platforms such as bZx, Aave, Celsuis Network, Synthetix, Loopring, Ampleforth, Polkadot.
DeFi companies turned to Chainlink after the February attacks on bZx, when a hacker twice exploited a protocol vulnerability, tricked an oracle and withdrew nearly $ 1 million.Then the attacker was able to manipulate asset prices and withdraw funds because the platform used the Kyber network as a single oracle.
Chainlink uses a decentralized oracle network. In this case, the hacker cannot repeat the attack similar to the bZx case - manipulations with one oracle will not have a significant impact on the final result of the transaction. Chainlink's decentralized oracle network significantly expands the functionality of DeFi smart contracts, increases the variety of products on offer and makes the market more attractive for regulated players.
“If in 2017 investors bought up any altcoins, hoping that at least some of them would shoot, now they prefer only those projects that have a distinct niche in the market. LINK is one of the obvious favorites: oracles are in demand in the work of smart contracts, and their popularity is constantly growing. Many startups on smart contracts, for example, prediction markets, have their own oracle systems, but even they prefer to use third-party trusted services for tasks. Hence the LINK network has excellent chances of success, ”noted Viktor Argonov, analyst at EXANTE broker.
Sergey Zhdanov, CEO of EXMO Exchange, believes:
“The main advantage of Chainlink is that the company has occupied a niche that has been addressed by relatively few large projects. At the same time, it offers precisely a decentralized network of oracles. High-profile partnerships have given them additional credibility in the industry. “Considering that the company continues to actively enter into new partnerships, by the end of 2020, it must be assumed, the number of partners can go far ahead. Thus, it is gradually becoming a kind of monopoly on a specific solution for blockchain projects. And the heightened need for DeFi projects this year to improve security by increasing the number of oracles only increases the role of Chainlink in the cryptocurrency sector. At the same time, due to a large number of partners, Chainlink is gaining extensive experience, receiving additional fuel for the growth of the project. "
The bullish trend of the coin may turn into a bearish one
Chainlink is a promising but risky asset. LINK was characterized by high volatility throughout the year. The current upward trend in value signals the willingness of traders to keep prices afloat above critical support levels.
Once the impact of news about MakerDAO collateral and new Chainlink partnerships dies down, investors can start offloading their positions in LINK by switching to BTC or fiat, primarily the dollar. The coronavirus pandemic has boosted demand for the US dollar among institutional and retail investors. As long as it drags on, most will be calmer with him.
However, despite the ongoing bullish trend, technical indices and general market conditions, coupled with uncertainty due to the pandemic, indicate that the coin could soon go through another bearish momentum before continuing its uptrend. But there are no fundamental reasons for a protracted drop in the rate: the project is actively developing and is of interest to investors.
Sergei Zhdanov noted that while LINK's prospects look very positive.
“An important role in this is played by the fact that the project is preparing to move to its own blockchain network, while using the Proof-of-Stake consensus algorithm. Chainlink ranks among the 15 most anticipated staking networks. Given LINK's strong growth over the past year and its presence on many of the largest cryptocurrency exchanges, it seems likely today that the organization will become one of the ten most popular staking retention projects. ”
“LINK is now becoming more expensive and shows independent dynamics against the background of the general market movement. A well-chosen niche plays into the hands of the project, as well as the prospects for collaboration with major players. In particular, the company is establishing cooperation with Google and Swift. Nevertheless, as the company grows, it may face new challenges: difficulties in scaling, concentration of capital among a small number of persons, potential legal problems. It should be noted that not a single blockchain is insured against such difficulties, and much depends on how successfully the company's management will be able to cope with them, ”concluded Viktor Argonov.
