Is Chainlink (LINK) a Good Investment?

  • Chainlink is a decentralized oracle network that provides price and events data collected from on-chain and real-world sources. It provides real-world data to smart contracts on the blockchain. Launched in 2017 by Sergey Nazarov, Chainlink aims to offer a solution to the “oracle problem,” or the ability to get the off-chain data needed to operate many blockchain-based smart contracts. The token incentivizes participants to provide and use this data. Chainlink does not operate its own blockchain. Instead, the token protocol is blockchain agnostic and can run on many different blockchains simultaneously. At the time of writing this post (Sep 14, 2021), LINK's Return On Investment (ROI) over the past year was 165%, underperformed in 'xDAI Ecosystem, Polygon Ecosystem, Near Protocol Ecosystem, Solana Ecosystem, Infrastructure, Polkadot Ecosystem, Oracle, Decentralized Finance (DeFi), Business Services, Smart Contract Platform' categories which had 467% growth over the past year. It underperformed in the crypto market which had 12604% growth over the past year.
  • Regularly, investing in projects with multiple contributors and commits is considered a safer and better investment (this means they are busy working and building the project). According to its Github account, there are 80 Contributors to the development of LINK.
  • LINK's Twitter account saw a growth of 63% over the last months in the number of followers, which is considerable. Also, the number of LINK Reddit subscribers increased by 19%. However, the Telegram channel users had a 15% growth over the last months.
  • LINK's Market Capitalization rank followed an overall declining trend, starting at the rank of 15-15 on July-Aug 2021, reaching 15 in Oct 2021. However, by the time of writing this post, LINK's market cap rank is about 16, and its value is $1,341,918,434 Billion. Moreover, its liquidity score is 75% above the market's average score, making it relatively easier to sell in bear markets.
Is Chainlink (LINK) a Good Investment?
Is Chainlink (LINK) a Good Investment?
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Introduction

Chainlink is a decentralized oracle network that provides price and events data collected from on-chain and real-world sources. It provides real-world data to smart contracts on the blockchain. Launched in 2017 by Sergey Nazarov, Chainlink aims to offer a solution to the “oracle problem,” or the ability to get the off-chain data needed to operate many blockchain-based smart contracts. The token incentivizes participants to provide and use this data. Chainlink does not operate its own blockchain. Instead, the token protocol is blockchain agnostic and can simultaneously run on many different blockchains.

Chainlink Execution Process

Smart contracts are pre-specified agreements on the blockchain that evaluate information and automatically execute when certain conditions are met. LINK tokens are the digital asset token used to pay for services on the network. Two of the key objectives to ensure security on the Chainlink network are the distribution of data sources and the distribution of oracles. Like all networks, Chainlink wants to add more people and operators to become more robust and valuable–increasing their network effects. To facilitate communication between its users and external data sources, Chainlink divides its execution process into three distinct steps:

  1. Oracle Selection
  2. Data Reporting
  3. Result in Aggregation

Though Chainlink started on Ethereum, their oracle services are also available on other blockchains such as Bitcoin and Hyperledger. Both independent developers and large companies can sell data as node operators to the Chainlink network and be paid LINK tokens in the process.

How does Chainlink work?

To facilitate communication between its users and external data sources, Chainlink divides its execution process into three distinct steps. 

  1. Oracle Selection – First, Chainlink users draft a service-level agreement (SLA) that specifies a set of desired data requirements. The software then uses the SLA to match the user with oracles that can provide the data. Once the parameters are set, the user submits the SLA and deposits their LINK cryptocurrency in an Order-Matching contract, which accepts bids from oracles.
  2. Data Reporting – This is where the oracles connect with external sources and obtain the real-world data requested in the SLA. The data is then processed by the oracles and sent back to contracts running on the Chainlink blockchain. 
  3. Result Aggregation – The last step involves tallying the results of the data oracles collected and returning them to an Aggregation contract. The Aggregation contract takes the responses, assesses the validity of each, and returns a weighted score, using the sum of all the data received, to the user.

Financial Analysis

Chainlink price today is $30.81 with a 24-hour trading volume of $1,534,168,792. LINK price is up 4.9% in the last 24 hours. It has a circulating supply of 460 Million LINK coins and a total supply of 1 Billion. At the time of writing this post (Sep 14, 2021), LINK's Return On Investment (ROI) over the past year was 165%, underperformed in 'xDAI Ecosystem, Polygon Ecosystem, Near Protocol Ecosystem, Solana Ecosystem, Infrastructure, Polkadot Ecosystem, Oracle, Decentralized Finance (DeFi), Business Services, Smart Contract Platform' categories which had 467% growth over the past year. It underperformed in the crypto market which had 12604% growth over the past year.

Projects with public Github account have more transparency and reliability. Regularly, investing in projects with multiple contributors and commits is considered a safer and better investment (this means they are busy working and building the project). According to its Github account, there are 80 contributors to the development of LINK.

Another critical factor in the success of any project is gaining public attention. Our data shows that LINK's Twitter account saw a growth of 63% over the last months in the number of followers, which is considerable. Also, the number of LINK Reddit subscribers increased by 19%. However, the Telegram channel users had a 15% growth over the last months.

Over the last five months, LINK's Market Capitalization rank followed an overall declining trend, starting at the rank of 15-15 on July-Aug 2021, reaching 15 in Oct 2021. However, by the time of writing this post, LINK's market cap rank is about 16, and its value is $1,341,918,434 Billion. Moreover, its liquidity score is 75% above the market's average score, making it relatively easier to sell in bear markets.

Is Chainlink (LINK) Network the best cryptocurrency to invest in?

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