Is Chainlink the special ingredient behind these altcoin rallies


2021 was the year that decentralized finance (DeFi) really took the cryptocurrency industry by storm, as several new trading protocols and platforms emerged in Ethereal-as Layer 1s. Another trend that could be seen emerging within the smart contract platforms on which these applications are built was the integration with the decentralized Oracle network, Link of the chain.

The Chainlink network provides real-world data and information to on-chain smart contracts through the use of oracles. This includes payment methods, price sources, and other events that are not native to the underlying blockchain.

Its many partnerships have made it one of the most integrated networks in the space, and its functionality is being used not only by L1 but also by exchanges like BitYard and Kucoin and traditional asset managers like Gemini. In November of last year, the network revealed that its total value secured through smart contracts had exceeded $75 billion.

While Chainlink’s ease of use for blockchains is evident in its growing popularity, has it also helped in the success of its native tokens? Crypto enthusiast ‘Alpha’ thinks so, as recently took to twitter to highlight a correlation between Chainlink Oracle’s integration by blockchains and an increase in demand for its native tokens.

Looking at the leading smart contract platform Ethereum, which hosts the largest number of existing dApps and was the first to integrate Chainlink oracles, a correlation cannot be made directly. However, their importance can be seen in the way they are used by the big Ethereum-based market players.

While MakerDAO relies on its pricing sources to determine the value of the underlying collateral backing the asset, stablecoin issuers like Paxos and BitGo use their reserve proofnet to prove collateral for their tokenized assets.

However, a clearer trend can be seen in rival Ethereum blockchains, whose DeFi ecosystems are still comparatively nascent. A good example is avalanche, whose native token AVAX went parabolic right after integrating with Chainlink oracles last July. Even its founder Jihan Wu had indicated at the time the hundreds of projects building on the ecosystem were waiting for Oracle functionality to be integrated before releasing their products.

Since then, Avalanche has become one of Ethereum’s top contenders, with Bank of America even recently claiming that it could one day overtake the master.

A similar trend could also be seen in the price action of ghostThe native token since the network integrated with Chainlink in August of last year.

Other leading smart contract platforms that are following a similar path include Solarium Y Earth, which have already implemented the integration in their test networks. Alpha expects a similar result to occur for these L1s, provided “there are active developers and dApps being deployed on their respective chains.”

Chainlink itself is constantly developing its ecosystem, with features like staking and the Cross-Chain Interoperability Protocol (CCIP) in preparation for 2022.

However, these developments have not had a positive effect on Link’s price action, which has remained in limbo since the cryptocurrency crash last May.