Even amongst the corona crisis and world economies dwindling, one concept that has stood the test of times and is certain to affirm its position is DeFi, an abbreviation used for Decentralised Finance, an ecosystem of financial apps built on top of the blockchain that seems to be pumping oxygen-breathing life into cryptocurrency markets today.
It has been time and again emphasized that the conventional regulations of Finance, which have too many objectionable loopholes and mysteries unsolved, cannot withstand the test of time. Supporters DeFi has defined an objective to create an entirely transparent system that defies regulatory or controlled features. Hence it eliminates the need for any central authority.
DEFI AND DAPPS: CURRENT SCENARIO
An uncountable series of DeFi apps invade investment markets, predominantly encouraging investors to invest or lend money that offers promising returns. It shall be of pivotal significance to mention Chainlink, the decentralized oracle network that has been much the town’s talk. Its primary objective is to accord real-world data to smart contracts on the blockchain.
Another significant advantage is that dApps do not have to abdicate control of their oracles entirely, and instead, dApps can use Chainlink as an auxiliary oracle client. Dapp can source a third-party oracle to deliver data into the contract or do it themselves.
Two predominant crypto coins BTC & ETH, are the significant players of DeFi, and a plethora of networks of computers govern both without any central authorities. Bitcoin has started ruling the markets in place of Bullions like Gold, and on the other hand, Ethereum has been helping startups crowdfund their operations. A few are using Bitcoin as hedging saviors against inflation and to send money to family members in other countries.
Some new crypto apps and other Bitcoin-like digital tokens have the same acceptance in currency markets as per conventional ones under Central Bank’s umbrella. Dai, the widely used dApp is enormously popular over the past few months. Almost $339 million worth of ether is locked up in Dai, while Compound has about $34 million in locked ether. Volatile cryptocurrencies have forced Traders to exit and swap it for Dai instead of a fiat currency.
DEFI & CHAINLINK: PRIMARY OBJECTIVES
The sole reason for the emergence of decentralized finance, as explained above, has been to revamp the banking system in a way that investors find it not only hassle-free but also decontrolled. Some tech-savvy entrepreneurs welcome the DeFi waves due to technological benefits; others view it crucial purely based on censorship-resistant product offerings.
The effect is quite apparent in the year-to-date ROI of the major decentralized oracle providers, Chainlink, and Band Protocol, when compared with BTC. Resilient security can offer possible outcomes to the oracle problem. It cannot be ignored how DeFi & Chainlink are positioned technically & strategically to be a foundational component within many DeFi tech stacks.
OUTCOME OF CHAINLINK & DEFI NUPTIAL
Chainlink appears to have researched the market well and hence subsidized the value of data feeds by offering the price reference contracts to the market. DeFi apps need to call the on-chain contract for the data, which can then be used to set off their smart contracts.
Well supported by an extremely adept team with a matchless research unit devoted to constructing a robust oracle network which is entirely decentralized, Chainlink tops the list of solution providers creating secure and scalable oracles that boast of the below-mentioned advantages:
- Approachability—Interaction has been user-friendly and easy to monitor protocol vis-à-vis any conventional restrictions in terms of geographies and political controls.
- Ownership – It is always a two-way benefit to investors as they are participants as Users in the transaction and providers of service, contrary to the traditional finance system where buyers have no role to play and remain dormant while giving service.
- Crystal-clear Lucidity—DeFi protocols’ open-source code allows users to verify the security and network usage.
- Decontrolled Restraints— Decentralized Chainlink supported oracles mean that all is open-source software and hence no regulatory framework.
- Technology-driven Mechanisation— DeFi instruments are governed by software protocols where the users have complete control over their funds outside of the exchange.
CHAINLINK’S PRICE FEEDS
Chainlink’s focused price feeds are ideal examples of effective technology-driven tools. That is primarily why competitors like Band and Ethereum cannot manage the same functionality of multiple blockchains with equal efficiency.
Chainlink has recently introduced its second price reference oracle network, BTC/USD, with a majority of 20 nodes. With ETH being the famous and predominant roleplaying asset and most prices denominated in USD, Chainlink provides a vital price reference to the DeFi ecosystem. The mammoth journey does not stop here. Chainlink plans to introduce additional networks adjusting the update procedure of its price reference contracts.
Initially, the price feed was updated at an interval of 5 minutes. Later, it went down to every 10 minutes for the ETH/USD and BTC/USD requests. In the latest development, Chainlink has launched a price deviation model called the “Flux Monitor,” which puts up the current price every time a 1% change is marked.
Chainlink holds almost 44% of the total DeFi market as of now. DeFi’s dominance against the overall crypto market is around 3.1%. There are major benefits out of this traction:
- DeFi dApps stay updated all the time, even during times of volatility
- Chainlink saves on cost during low volatility
NO. OF PARTNERSHIPS OF CHAINLINK
Chainlink has garnered significant handshakes with conglomerates and billionaire empires like Google, Oracle Corporation, Gartner, Binance, and potentially soon SWIFT will be a partner too. Chainlink founder Sergey Nazarov says the oracle provider is helping to drive growth in DeFi. Chainlink has revealed disclosures of mergers with renowned DeFi startups, guaranteeing brownies of a Security, Fast and decentralized Retrieval, and Tamper proof delivery of data.
Chainlink had also partnered with Arbol, a crop insurance provider, to offer decentralized oracles for weather-related data. According to the Arbol blog,
This is facilitated by the data sourced through the National Oceanic and Atmospheric Administration (NOAA) by Chainlink.
Yield farmers aiming for hefty gains are driving a boom in DeFi space, with $3 billion invested into DeFi applications. Such oceanic data has to be infused into smart contracts, which has to safeguard billions, and here comes to aid “CHAINLINK” once again.
GROWING FAME AND PATH AHEAD FOR CHAINLINK
Once the ecosystem for Chainlink has grown, its path has become further curved. The clear focussed strategy to educate potential users and integrate new projects establishing their presence worldwide has been on their agenda. Additionally, their resources are being divested towards developing communities and accelerating platforms.
Another recognizable strategy retained by Chainlink is the freemium model through its price reference data oracle network services. With the help of this, no. of users can be on-boarded to the platform to access basic services without any commitment. Once they get used to the network, they start purchasing premium features too.
Chainlink’s dynamic approach offers customized solutions to customer requirements of adaptive oracles. According to Capitalbay, in the upcoming time, we can see the nuptial of Chainlink-Defi, resulting in mutual development and maturation of both ecosystems and finally treading the path of mutual survival through bi-directional value flow.
CHAINLINK-DEFI: TALK OF THE TOWN BANNERS
A prominent statement that featured in the article, The Seven Requirements for a Viable Decentralized Oracle Network,
Meanwhile, Simon Peters, a crypto market analyst at investment platform eToro, said,
Spencer says,
Kain Warwick, Founder at Synthetix,
A weekly writer in Forbes review Journal 3, September, Koeh Wah says,
Kris Marszalek, co-founder and CEO of Crypto.com said of the integration,
Chainlink, being ranked top amongst DeFi projects, comes as no surprise as the platform provides oracles that provide much-needed data for the smart contracts that ran these platforms. The efficiency and prominence of Chainlink’s blockchain technology have been highlighted quite regularly. The fact remains, the market cap of decentralized finance or DeFi has recently hit $11 billion, with no signs of stopping as Chainlink (LINK) takes the lead with another all-time high.