Chainlink, LINK

Chainlink is a decentralized network of verified oracles for smart contracts. It integrates external data from oracles with public blockchains. The network aims to make it easier to connect payment systems, channels with market data, back ends, off-chains, and any web API to blockchain platforms with smart contracts.

Chainlink operates on Ethereum and consists of two components — on-chain and off-chain ones. Besides smart contracts in its blockchain, it supports Bitcoin and Hyperledger blockchains. Developers plan on expanding compatibility with other platforms that allow creating smart contracts and also want to forge cross-chain connections among them.

Chainlink project history

Establishment: September 2014, Grand Cayman (Cayman Islands).
Founders: blockchain startupper Sergey Nazarov and software engineer Steve Ellis.
Previous experience: Mr Nazarov used to create peer-to-peer marketplaces and established service CryptaMail; Mr Ellis worked for Pivotal Labs on data privacy protection and software for payment automation. Both of them had established Secure Asset Exchange earlier.

Assistant: Ari Juels — co-author of white paper.
Advisers: Andrew Miller, Evan Cheng, Hudson Jameson.

Organisation: SmartContract Chainlink Ltd SEZC; 2014, Grand Cayman (Cayman Islands).
Executives: Sergey Nazarov is CEO, Steve Ellis is CTO, and Brendan Magauran is Head of Operations.

Project announcement: December 2014.
Public launch: June 2017.

Investment in the project

1. September 2014: seed investment from Data Collective (DCVC) and Underscore.
2. July–August 2017: $29 million during the presale.
3. September 2017: $3 million during the token sale.

Chainlink cryptocurrency attributes

The Chainlink network facilitates external services for data provision and creators of smart contracts on blockchain platforms. Oracles that are called node operators in this network provide data validation for authenticity and reliability of operations. Anyone capable of creating a data feed and connecting an external API can become an operator and profit on extracting and validating data with the following transfer to smart contracts.

A node operator receives LINK tokens for completed tasks from creators of smart contracts. Thus, for operators, these tokens are ways to make a profit, and for those who need data validation, they are a payment for a service. The more important and the higher quality data are after processing, the more their recipients are willing to pay before inserting them in smart contracts.

A node operator can also buy LINK but they need tokens to use their supply as a stake in addition to reputation. Operators with a perfect reputation and a high stock of tokens are most often contacted. They are offered interesting and continuous orders. However, if processing quality goes down, data inaccuracy and errors appear, or an operator stops responding to requests, the network will lower the operator’s reputation and take away some tokens as a penalty.

Chainlink strives to provide reliability by checking relations between participants. For this purpose, the network has a validation system, a reputation system, a certification service, and a contract-upgrade service.

At first, LINK was just a token of the ERC-20 standard. Then, developers charged it with additional functions of ERC-223. Now, tokens follow the ERC-667 standard. Compatibility with the legacy ones is still in place.

Chainlink token sale and LINK distribution

The project raised funds for development twice. The presale for early investors started on 21 July 2017. Tokens were sold to them for ethers at the price of 2400 LINK for 1 ETH. It is not known how many tokens were sold, the leaders only said that they had raised $16 million. The crowdsale was supposed to collect the same amount within a month. The total planned amount would have been $32 million.

The project team released 1 billion LINK by limiting the issue with this amount and decided to distribute it the following way:

On 19 September 2017, a public token sale began but was cut short after a few hours. Turned out that before the start there were tokens only for the amount of $3 million, so they were quickly distributed. Available tokens were exchanged for ethers for the price of 2600 LINK for 1 ETH. As it was revealed later, in the course of the presale, the team received $29 million but due to hard cap could not collect more than $3 million from the public.

Chainlink price dynamics

Exchanges started listing the token on 20 September 2017 at the price of 0.1892 USD. Three days later, it set an all-time low of 0.1311 USD. Patient investors who held LINK until 31 December could have sold it for 0.6016 USD — this was a high of 2017.

OHLC prices of 2018:

• open — 0.7336 USD;
• high — 1.38 USD (8 January);
• low — 0.1663 USD (28 June);
• close — 0.2894 USD.

LINK price change in 2019

On 1 January 2019, the price went at its low of 0.2994 USD and then went flat until May. This was followed by strong upward and downward trends. Let’s list the price extremes of the trends that are noticeable on the 2019 Chainlink chart:

1. 📈 Rise from 7 to 23 May: 0.5447 USD ⤴ 1.34 USD.
2. 📈 Rise from 9 to 29 June: 1.07 USD ⤴ 3.70 USD — a high of the year.
3. 📉 Fall from 5 to 30 July: 3.62 USD ⤵ 2.09 USD.
4. 📉 Fall from 19 August to 14 September: 2.51 USD ⤵ 1.57 USD.
5. 📈 Rise from 26 September to 9 October: 1.66 USD ⤴ 2.80 USD.
6. 📈 Rise from 19 October to 14 November: 2.36 USD ⤴ 3.06 USD.
7. 📉 Fall from 15 November to 17 December: 3.04 USD ⤵ 1.76 USD.

The rise in May was contributed by rising prices in the entire market. In June, the main cryptocurrencies also helped, and in addition also the transition to the Ethereum mainnet.

Chainlink predictions for 2020 and prospects

Unlike other cryptocurrencies that peaked in December 2017 or January 2018, Chainlink revealed its potential only in 2019. Then it turned out that the fixed high was far from the peak, and token vaulted in during the crisis of 2020.

Since the network runs on the Ethereum blockchain, the LINK token often correlates with the ETH coin. With a low at 1.74 US dollars on 2 January, the LINK price began to increase in parallel with ETH. The uptrend continued until 18 February and ended at around 4.54 US dollars. The increase was 160.9%, and ETH added 121.3% for the same period. Further, everything had a correction, but from 25 February to 5 March, LINK went against the tide, having risen in price from 3.51 to 4.72 US dollars — an all-time high.

Of course, with the collapse from 10 to 16 March, it was more painful to fall: a decrease from 4.08 to 1.78 US dollars gave minus 56.4% (ETH decreased by 44.9%). Though, the price recovery took place with increased zeal: from 5 April to 10 May, LINK went up from 2.28 to 4.03 US dollars. Its growth was 76.8%, and ETH recovered by 47.1%. At the end of May, both cryptocurrencies started an uptrend, in which LINK twice approached the high: on 4 and 9 June it fixed the same marks at 4.48 US dollars. Most likely, during the summer of 2020, the price will break the March record.

Chainlink roadmap

The project does not have an official roadmap, yet one has to somehow follow the development stages. Then we will create our own map to predict events that can affect the Chainlink price:

• 27 June 2017: v1 release.
• 18 March 2018: change of language used for nodes — from Ruby to Golang.
• 30 April 2018: connection of Ropsten — the Ethereum testnet for creating test tokens.
• 15 May 2019: three independent audits.
• 30 May 2019: transition to the Ethereum mainnet.
• 13 November 2019: start of the Chainlink Community advocate program.
• 30 January 2020: launch of the price reference data feed for DeFi.
• 3 March 2020: start of the Bug Bounty program at HackerOne with rewards from $250 to $5000.
• 12 May 2020: addition of the verifiable random function to oracles.