In this week's newsletter, I am researching Chainlink, the world’s largest, most trusted oracle network. WTF is an oracle... isn't that a wizard?!
Chainlink is a decentralized oracle network that provides real-world data via Chainlink nodes a.k.a. "oracles" (information from off-blockchain sources) to smart contracts on ANY blockchain. Smart contracts are blockchain-based agreements that automatically execute when certain conditions are met. Smart contracts depend on offline data provided by oracles (Chainlink nodes). So basically the Chainlink network links real-world data (not on a blockchain) to smart contracts (on a blockchain). Here's how it works:
Data requesters pay for data with the LINK token.
Chainlink oracle nodes deposit LINK as collateral to guarantee data reliability and are paid LINK for providing this data to requesters ongoing.
Coinbase views Chainlink as the "de facto" provider for connecting smart contracts to off-chain data (i.e. the outside world).
So many agreements today are archaic, require middlemen, and are prime for disruption via smart contracts... such as real estate, healthcare, legal, supply chains, data feeds, etc. But for every new smart contract, there needs to be a connection to “off-chain” data and Chainlink has the first-mover/monopoly advantage as the #1 oracle provider!
There are 1 billion LINK tokens. The finite supply of LINK tokens contributes to its scarcity value, like Bitcoin.
Chainlink 2.0 increases network security and provides Chainlink node operators with rewards of up to 5% annually. These incentives create network effects that will attract more high-quality Chainlink node operators and this locked-up LINK create further deflationary pressure on supply (i.e. LINK token price increases over time).
Chainlink oracles are now powering 1,000+ smart contract applications.
Grayscale Investments offers a dedicated Chainlink Trust investment option.
Bank of America said Chainlink could accelerate the adoption of next-generation blockchain use across finance, insurance, supply chain, gaming, and gambling.
The Associated Press launched a Chainlink node to make its trusted economic, sports, and race call datasets available to blockchains.
Accuweather launched a Chainlink node to supply and sell weather data directly to smart contract applications. For example, an insurance company's blockchain-based insurance applications could get access to AccuWeather data (e.g. number of tornados in your zip code), allowing the insurance company to automate claims processing and lower operating costs.
I plan to buy Chainlink at the price of $4 per LINK via Gemini (plus with Gemini Earn our LINK earns 0.45% APY). With past LINK support/resistance levels near $4 and the crypto market looking like a swirling 💩 in the toilet, I think we still have further downward movement.
All-Time High (ATH) = $52.20
Buy Target = $4
Portfolio Allocation = $1000 or 2-3%
Chainlink Price Prediction (10+ Year Hold) = $150+
I have limit buy orders placed on Chainlink at $4 and I plan to dollar cost average any dips below that price.
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