Chainlink Analysis

in #blog2 years ago

With the emerging of blockchain/cryptocurrency ecosystem, it becomes more and more indispensable to bridge the outside world to the blockchain, and Chainlink is such a product.

It is a decentralized network of oracles that enables smart contracts to securely interact with real-world data and services that exist outside of blockchain networks. It can be used in several ways.

In the world of blockchain, there are too many scams and fake new, in order to figure out what it is, I installed a Chainlink node in the ethereum rinkeby testnet and tried to use it as a client smart contract and then I analysed the product from a investor's point of view. In my opinion, Chainlink should be more valuable then most of other blockchain products in current stage. Blockchain must be used by the real world, so chainlink is the core bridge to the real world. Technically, it works in the diagram:

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The usage of the token LINK is to pay node operator, so with more an more requirements to get access to the real world data, more LINK tokens will be in demand, which is the value of the chainklink token.

Chainlink is decentralizing its node operators by introducing Flux aggregator,which is to integrate data from different node operators to guarantee the integrity and reliability of the data source. To reduce the gas fee for node operators, it also recently introduced another feature called off-chain report. So technically, this is a good product.

Now we are going to view this product from an investor's angle:

  • What's the usage of this product ?

Smart contract cannot initiate data request by itself, before Chainlink, it is a problem for defi products to get real world financial data, but Chainlink provides a bridge from real world to smart contract. From my point of view, it is more valuable than "The Graph", which manifest blockchain data to outside DAPP, since blockchain must provide value to the real life so it must need input from real world, but the world doesn't necessarily rely on blockchain.

  • How many node operators and how much are the daily data requests?

We can see from market.link that there are about 322 nodes and their daily revenues, the services they provide are transparent to investors.

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  • Apart from Ethereum, are there any other chains are using Chainlink?

    We can see from here,Chainlink is widely used, apart from Ethereum, it is used in BSC, xDAI, polygon, Avalanche, Arbitrum and so on:

    image.png

  • Who are Chainlink's competitors?

    Chainlink is the largest oracle in the blockchain, another one is band protocol, but it is too small in scale compared with Chainlink, and it is built on cosmos blockchain, which I don't think will be competitive with Ethereum ecosystem.

  • Its evaluation, is the LINK price too high or low?

    We can take Chainlink as a decentralized market data provider company in blockchain, in coinmarket, its current market capital is: 12.5 Billion, which might be too high compared with a traditional financial market data company. But it is blockchain, startup might be overvalued in certain stage.

    image-20211014201956887

In summary, Chainlink is a good blockchain product, we can take it as a decentralized market data company. But it is hard to say if this is a good price to buy in.