What is Chainlink?; The LINK Crypto Token That Everyone is Buzzing About
Due to the recent bullish activity on the cryptocurrency market, we’re starting to hear the phrase “altcoin season” being thrown around on Twitter and other social media channels. While it’s still too early to say altseason is in full swing, we can start dissecting the big players in the game and see what’s behind their recent success. Chainlink and its LINK crypto token are making headlines as of late due to its quick rise from $4.30 to $6.30 in just a few short weeks. So for those new to this trending project, let’s do a deep dive into the history as well as show you some YouHodler customer success stories using LINK.
Chain Link origin story: The strength of LINK
LINK price history (source)
The incredibly long and cold crypto winter of 2018 wiped out many weak projects during that time but it was a true testament of strength to some of the more promising organizations out there. Chainlink was one such project that weathered the storm and kept growing during the infamous bearish market.The reason for this is simple. Chainlink has a utility.
To understand this utility, one must first understand blockchains. Without getting too technical, blockchains use cryptography to help create a completely secure, decentralized, and trustable public ledger. Each blockchain is independent of another which is both good and bad. The problem with this is that it can be hard to get information from outside the blockchain to the inside. This opens up a vulnerability in the chain and one must find a trusted source outside that provides accurate information.
Chainlink saw this vulnerability and said there must be a better way to get information about event outcomes (e.g. the price of Bitcoin) without having to worry about compromised data, lying, and cheating. Fortunately, they did find a better way.
What is Chainlink and what does it do?
Previous to Chainlink, blockchain oracles (the name for a data source that goes between blockchains and the outside world) were the single point of failure during information exchange. However, Chainlink discovered a way to transmit this information in a trustworthy, secure and decentralized way. They did this by creating a large network of nodes that provide information both to and from the blockchain. As a result, an important part of smart contract foundation was formed.
Middleware, operating between the blockchain and external data (source)
Chainlink calls this “blockchain middleware” and it helps Chainlink oracles provide accurate and important information like event results, price feeds, and entry points to traditional payment worlds without having to sacrifice security or the decentralized philosophy.
With a decentralized network of oracles, constantly purchasing, and providing data, Chainlink allows purchases to select the data they want and providers then bid to sell that data. To do this, providers need to first commit a stake of LINK crypto tokens when making this bid and if they do not follow the rules, this LINK is taken away. When the providers are selected, it is their job to bring the right answers on the chain.
Chainlink creates a wonderful system of checks and balances called an “oracle reputation system.” This helps to analyze, weigh, and aggregate the data provided. If everything goes smoothly in the information exchange process, then providers get paid and the deal is a success.
Who is Chainlink’s founder?
Sergey Nazarov (source)
Sergey Nazarov is a name many people believe will soon be synonymous with “enterprise smart contract adoption.” In his young career, Nazarov has already helped major enterprises like Google, SWIFT, and Oracle adopt Chainlink’s blockchain middleware. This is due to his past working with some of the world’s leading banks, insurance companies, and big tech firms to create externally connected smart contracts. As a result, Nazarov has a unique perspective on what is needed to bring smart contracts to the mainstream.
This is the core foundation of Sergey Nazarov’s vision, to create the most efficient smart contract ecosystem and help it evolve in a way that creates the most secure blockchain middleware possible. As described above, the technology is proven to work and now the next steps are to build upon the network and create many more immediately useful chainlinks. On his vision, Nazarov states that currently, the organization is
“continuing to work on the best way to connect large existing systems and their underlying standards to smart contracts and are eager to help larger teams connect their existing systems to various contracts using the standards they rely on fro key operations like payment (e.g. SWIFT messages).”
What is Chainlink LINK token?
LINK is the native token of the Chainlink network. It is an ERC677 token that draws inspiration from the ERC-20 token functionality. ERC677 is unique because it allows for token transfers to contain a data payload. Furthermore, LINK is used for the payment of data providers previously discussed. When these providers come from the outside world with information to translate into the blockchain, they are paid for their work via LINK by the data purchaser. Prices are determined by oracles and data providers when they make their bids.
Earning LINK as a data provider is just one possible way to get LINK but many of the top cryptocurrency platforms have integrated LINK to their platform for trading, savings accounts, crypto-backed loans, and a variety of other tools. On YouHodler, LINK is quickly becoming a popular tool to use for crypto-backed loans, Turbocharge and Multi HODL. Later, we’ll go over a real-world example to show you how these users found success on YouHodoler.
Chainlink “Marines” and one of the best communities in crypto
One of the best aspects of Chainlink is the project’s incredibly active community. Calling themselves the Chainlink “Marines,” these passionate HODLers are found in large numbers in any social media channel. All the forums are professionally run by admins to ensure no illicit behavior or inappropriate conversations are had. The talks are always on point and focused and for those looking to learn more about this up and coming token, the “Marines” are a good place to start.
What can you do with LINK on YouHodler?
There are a variety of ways to use LINK on YouHodler. To show you what you can accomplish with our crypto-lending solutions, here are some real-life examples from real YouHodler LINK Hodlers. This particular client (let’s call him Freddie for the sake of privacy) used LINK as collateral for a crypto-backed loan and at the end, profited enough to cover the loan expenses and have plenty of leftover for himself. Here’s Freddie’s journey:
- Freddie takes 1200 LINK to uses as collateral for a loan of 2,616 USDT (worth approximately 600 LINK). The initial price of LINK at the time was $4.36 and Freddie chose our 180-day loan plan with a loan to value ratio (LTV) of 50% This means Freddie was able to use 50% of his initial LINK value
- During the time of the opened loan, the price of LINK rose quickly to $5.6599
- Freddie then wisely used YouHodler’s “Close Now” feature which used part of the initial collateral to repay the loan. As a result, Freddie got the leftover LINK which amounted to 696 LINK (valued at $3,897.6).
- After he used his collateral to repay the loan with “Close Now” Freddie can keep the 2,616 USDT he got initially. Now if we add this amount of 2,616 USDT (worth approximately 600 LINK) and add that to the leftover LINK from the loan, 696 LINK, then we get a total of 1296 LINK, which is 96 LINK more than Freddie started out with.
Hence, Freddie was able to use 50% of the value of his LINK the whole time and in the end, got more LINK without having to spend any of his own funds.
While this is an excellent example of how one could use LINK-backed loans for profit, using LINK with our Multi HODL tool in a bear or bull market can produce even greater results. Let’s use the most recent market condition as an example. As we saw with LINK recently, a 30% rally is entirely possible and on Multi HODL a user can set his own level of risk via the sliding ‘multiplier” scale. YouHodler’s max multiplier is x8.7 and with a 30% LINK rally, this equates to approximately 160% profit for the user.
Is altcoin season coming? Here are the signs
The above examples are just one such situation to use LINK on YouHodler. Whether the market is bullish or bearish, users can take advantage of our crypto-backed loans Turbocharge or Multi HODL tools or use a combination of all three to navigate the ups and downs of the market most efficiently and potentially profit.
If “altseason” is truly just around the corner, then that means LINK may just be starting its bullish behavior. In fact, there are several signs to watch pointing to an upcoming altseason. For example:
1. Is money flowing from Bitcoin (BTC) to other large caps like Ethereum (ETH)?
2. Are we seeing a decline in BTC dominance?
3. What is the BTC/USD chart doing? If it’s moving sideways, that’s an altcoin signal.
4. Is money flowing from large caps>mid caps> small caps?
If the above four questions are true, then that, in theory, should result in an altcoin breakout event. Of course, it is still too early to tell if this is for sure but keep your eyes on the signs and start preparing your portfolio for success with YouHodler.