Chainlink Gains Momentum Following Recent DeFi Attacks
LINK fundamentals are up 11-points over the past month, driven by a 32-point increase in User Activity. Price is up 76% in the same time period.
What is Chainlink?
Chainlink is a decentralized oracle service that enables blockchains to gain access to the outside world, by connecting on-chain smart-contracts to off-chain verified data. Chainlink’s decentralized network of nodes confirms the validity of external data before inputting it into a blockchain. This secure stream of data is then used to inform and trigger on-chain smart-contracts, which need to be funded using Chainlink’s native token, LINK.
Chainlink has become the primary oracle service provider for blockchains, having created both a reliable oracle network to connect blockchains to the outside world as well as a flexible framework for developers to integrate the tech as required by their respective chains. The team has announced dozens of partnerships with leading projects across the industry.
To the Rescue
LINK FCAS is up 11-points (1.31%) in a month, driven by a 32-point (3.61%) increase in User Activity, a metric which looks at both Project Utilization (user-operated wallets engaging in the intended use-case of the project) and Network Activity (a broader measure of network participation focused on non-exchange activity). Our data shows an increase in Project Utilization specifically.
Chainlink has been on fire this past month, with several major decentralized finance projects on Ethereum using its oracles instead of their own. These include Aave and Synthetix, who switched over after their early price reference feed was exploited by a trader.
In the news this week is the bZx lending and trading platform, which suffered an attack and lost $350,000 while the team was presenting at ETHDenver. bZx depended on only one oracle for pricing, enabling the hackers to trick the protocol into giving up the money. In order to diversify its price feeds, bZx announced it would partner with Chainlink.
Our Hot Take
Following Chainlink’s progress over the last couple of months suggests that the protocol is on its way to becoming the standard for providing off-chain data to blockchain applications. The fact that more projects are not only turning to Chainlink for increased security, but also announcing the partnership as a way to reassure their networks, is a clear testament to the oracle provider’s strong reputation. The release of its Meta Oracle functionality early January, which enables users to combine on-chain and off-chain values to set contract conditions, is only adding momentum.
