Chainlink — The Trojan Horse to New Liquidity

Cryptocurrency has finally taken the world by storm with a record number of financial institutions applying for ETFs to take advantage of the superior returns involved in this industry.

Bespoke to this reason we are at the forefront of a massive move in markets as more dollars are joining the party.

Beneath this behemoth of a market lies a coin that connects all the blockchains together using a decentralized data-feed oracle.

Without reliable data, the idea of blockchains becomes invalidated.

This token is set to become a trojan horse for new liquidity into the market as it opens up limitless possibilities for builders and gives rise to a new outlook for financial institutions to reconsider its value.

The token I refer to is Chainlink. One that has carved its own niche and has controlled its own narrative since inception. A coin like no other where it’s own industry heavily depends on and off-chain industries start to see its potential.

In this segment I will provide you what Chainlink is, it’s functionality, core-characteristics and it’s use cases for what it’s worth for the years to come.

FUNCTIONALITY

Founded by Sergey Nasarov and Steve Ellis in 2017, Chainlink is a decentralized oracle network that provides smart contracts a tamper-proof and highly reliable connection to all the world’s best data feeds. It acts a bridge between the existing off-chain infrastructure and data onto any blockchain environment.

Traditional data feeds or oracles were based on one centralized entity to provide the data for smart contract creation. If this entity were to go offline, become corrupt or manipulated then the data pertaining to smart contracts will either become stale or invalid at some point.

If the very data we use to make smart contracts is corrupt then the need to store this data on the blockchain becomes invalidated. The very essence of blockchain will no longer make sense. On top of that, blockchain transactions are irreversible so that misinformation on these smart contracts will become an overarching problem.

That is where Chainlink comes into the picture. It uses a decentralized oracle network (NOD) to prevent a single point of failure that occurs from a traditional centralized oracle or data feed. It incorporates three layers of decentralisation — the data source, individual note operator and oracle network levels to eliminate this from occurrence.

Chainlink data feeds already secure tens of billions of dollars across multi blockchain ecosystems with over 1500 crypto tokens using its data feed services.

On top of this, Chainlink provides the medium between off-line real world data to the blockchain environment. This means that developers can now compose any form of defi applications that pertains to the usage of real-world data. They can create applications for hospitals, schools, banks by using the data already existing in the world.

This opens up the space to create new and diverse smart contracts to benefit the world and solve the many problems that we face in daily life.

The opportunities have become endless.

CORE-CHARACTERISTICS

From its core use case a decentralized oracle network (DON), Chainlink offers a suit of products that accommodates this to promote an overall experience that benefits it’s users.

• Enables developers to build web 3 applications with seamless access to real world data across any blockchain
• High quality decentralized data-feeds for Defi, reserves, NFTs, sports, weather and more
• New features in version 2.0 include Verifiable Random Functions (VRFs), Off-chain reporting, CCIP (mentioned below)
• Cross-Chain Interoperability Protocol (CCIP): connects decentralized applications and allows the transfer of tokens across different blockchains
• Over 1500 Chainlink price feed used by other tokens, 170+ projects usage, 15 enterprise partnerships including oracle, intel, Google, Swift
• Blockchain-agnostic and has networks running on various Ethereum Layer-2’s — Arbitrum, Optimism, Polygon, Solana, Avalanche
• Platform allows any developer to request and receive data from any API using it’s secure network
• DON provides proof of reserves for stable coins and cross-chain tokens via the oracle network verification.

In its entirety, Chainlink provides a web3 service platform that provides solutions to data-orientation and access.

The image below exemplifies the niche market Chainlink has carved out and dominated since inception. It provides how strong the brand and value proposition is within the immediate industry as well as externally.

USE CASES

As you may already know Chainlink has provided its services to a insurmountable number of companies.

• 1500+ price feeds provided to all kinds of tokens and businesses from Coin Marketcap to Coin Gecko.
• Liquity uses Chain Link price feeds to help secure $2.7B Total value locked (TVL)
• The NBA uses it’s oracle network and Verifiable Random Functions (VRF) to power its NFT collection
• Associated Press used Chainlink to help verify articles written by its authors
• 2019 Google Cloud worked with Chainlink to create an API that queries data from over 9000 weather stations
• The final and most important use case is the partnership with Swift.

In 2022 the partnership between Chainlink and Swift grew significantly has they began to develop its own Cross-Chain Interoperability Protocol (CCIP) that helps the interbank network communicate with the blockchain environment so that capital markets can have access to distributed ledgers.

You may already know that Swift is an international messaging network system that how all banks interact with each other. This is how you send money overseas internationally using a telegraphic transfer from Swift’s network via any local bank you use.

The DON holds its capacity to connect all banks data feed together to provide accurate and timely banking services at the safest way possible.

As Swift begins to trial this CCIP in June 2023, it has partnered with major traditional financial institutions like ANZ, Citi, BNP Paribas, Lloyds to test the use case and infrastructure necessary to instruct the transfer of tokenized assets across banks within its own blockchains.

This is a very big step forward the not just Chainlink but the overall picture for cryptocurrency.

Imagine all the real-world use cases this can serve. From the data on stock market exchanges, retail payment systems, back-end operational systems, APIs, to sporting events and even internet sites.

The use cases are vast and endless and with this introduction of tamper-proof real-world data into smart contracts, the capacity to build better and more revolutionary tokens becomes limitless.

The success of this partnership also sheds a new light of how financial institutions will view these markets. If this alternative coin outside of Bitcoin and Ethereum can solve this massive banking issue then what else can the space offer?

To put the nail in the coffin, the company also had Ex Google CEO Eric Schmidt join Chainlink labs as an advisor.

His stated that “Chainlink is a secret ingredient to unlocking the potential of smart contract platforms and revolutionizing business and society,” said Schmidt. “I am excited to be helping the Chainlink Labs team build a world powered by truth.”

The final excerpt I’d like to leave you with is a statement from the CEO Sergey Nasarov regarding the parnership with Swift. This statement alone makes wonder, imagine and think of the grander site of these cryptocurrency markets.

Instead of focusing on the secular bull cycle that occurs every 3 years, what happens if we focus on the sight that is 10 years from?

“Banks hold the largest amount of capital globally and if our industry is going to grow past the single digit trillions, then the banks have to come in and in reality, I think it’ll be the banks and their clients that grow the blockchain industry past $10 trillion”.

Think bigger.