ChainLink FAQs

Coinberry offers a variety of digital assets on its platform, including Chainlink. Even though Chainlink sits firmly in the top-20 of all cryptocurrencies by market capitalization, it’s a relatively unknown project. Let’s fix that by diving deeper into Chainlink.

What is ChainLink?

Source: Chain.link

ChainLink is a decentralized network that links off-chain data to on-chain smart contracts. It can establish a secure network where smart contracts communicate safely with external data sources, internal systems, and various APIs without compromising speed.

This innovative project is inspired by the fact that Bitcoin and Ethereum lack an open, decentralized network of nodes. Their blockchain data is only validated by a handful of audited nodes and therefore can be vulnerable to censorship, whereas ChainLink uses thousands of independent nodes that all need to reach consensus on the blockchain before any transaction is accepted.

Powered by ChainLink Labs and built on Ethereum, ChainLink was created with one goal in mind: to speed up smart contract development and adoption by allowing developers to create feature-rich decentralized apps (dApps) that both individuals and organizations can use.

By design, ChainLink functions as a centralized oracle system that can verify incoming data and information. However, it has evolved into a decentralized oracle network that pairs with smart contracts using external data resources and solves blockchain’s middleware network problem.

What is the Native Token of ChainLink?

In April 2017, ChainLink Labs raised USD $32 million through an ICO. Chainlink’s Mainnet was released in 2019 due to delays within the project. The native token of ChainLink, LINK, is used to finance project development and incentivize node operators. LINK tokens are designed to run on the Ethereum ERC-667 standard, which allows ChainLink to benefit from the vast Ethereum ecosystem.

The function of the token 

LINK tokens exist to pay node operators who provide secure connectivity between smart contract platforms and external data sources. They are essential because they form an Oracle or bridge between outside data sources and blockchain platforms.

In general, any smart contract can use LINK tokens to pay a node operator for their data directly. For example, a smart contract may be interested in providing a daily price feed from a particular fiat-to-crypto exchange or real-time Bitcoin transactions. In this case, the smart contract will submit an Oracle Call, which is paid for with LINK tokens.

The value of that data is then determined by the node who submitted it, and they alone control the price of their services.

How Do The Tokenomics of ChainLink Work?

Source: chain.link

ChainLink, which is now the most popular oracle network in the crypto market,  signed partnerships with Google and Ethereum rival Tezos (XTZ) in 2021. The platform appears to be largely centralized, with more than 80% of the tokens controlled by 1% of wallets. But there’s more to the story. Let’s take a closer look at the token distribution: 

Among the 1 billion LINK tokens that will ever exist, there is a 35% staking pool for node operators. The team owns roughly 25% of the total supply, and crypto exchanges control around 16%. While it’s true that the team has enough LINK to affect price fluctuations, they’ve only sold 5% of the whole supply in the last three years.

ChainLink 2.0

Chainlink 2.0, unveiled in an April 2021 whitepaper, outlines a multi-year plan for further developing Chainlink’s decentralized oracle networks and the platform’s capacity to help facilitate the rapid rise of Smart Contract applications.

Chainlink’s 2.0 roadmap proposes various technical features which will improve the functionality of smart contract applications on ChainLink. The essence of these improvements is a network of Decentralized Oracle Networks (DONs) that combine to form an off-chain computational layer capable of orchestrating hybrid smart contracts.

Why is it Appealing to Investors?

Blockchain transactions are irreversible. As a result, when powering smart contracts, accurate data is not a choice; it’s a necessity. This is where Decentralized Oracle networks like ChainLink come into play.

Chainlink’s coin is one of the few tokens whose primary use case is not for trading; LINK is used to buy data on their platform. The team has been improving Chainlink and recently announced a partnership with Google Cloud, which made LINK around CAD $25.4 million in value in just a day. As they look to the future, investors expect not only the success of LINK but increased partnerships as well.

Sergey Nazarov is the 32-year-old tech entrepreneur who founded Smartcontract.com, which inspired him to start Chainlink in 2017. He has a programming and software development background and is an alumnus of the Rochester Institute of Technology. The company’s CTO, Steve Ellis, is also the co-founder of the project.

LINK has been connected with billion-dollar projects. Some of these projects include Synthetix, Polkadot, Kyber Network, Tezos, and others. These Integrations have attracted investors such as Nirvana Capital, FJ Syndicates, and Fundamental Labs, to name a few.

How Many ChainLink Tokens are in Circulation?

Source: coinmarketcap.com

There are about 500 million LINK tokens in circulation, according to data from Coinmarketcap, with a maximum supply of 1 billion. 

LINK tokens have witnessed a surge in value from CAD $8.89 in the last quarter of 2020 to an All-time height of CAD $63.50 in 12 months. Speculators expect prices to top CAD $100 sometime in 2022.

What Wallets Support ChainLink?

ChainLink is an ERC20 token, so it may be kept in any Ethereum wallet. However, we recommend using hardware wallets like Trezor and Ledger Nano S for more significant security if you wish to keep ChainLink for an extended period.

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Where Can I Buy Bitcoin Cash?

You can buy Bitcoin Cash on Coinberry by signing up for an account here.

Additional Resources

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