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Clients have long been anticipating the arrival of Chainlink (LINK) in their tax-advantaged Crypto IRA retirement account and we couldn't be more thrilled to add it to our list of new digital asset offerings.
Understanding Chainlink (LINK)
Chainlink's whitepaper was published in 2017, and has since established itself as a key player in the ever-growing blockchain space. The Chainlink team builds dynamic software that enables smart contracts to connect to real world data. Chainlink CEO Sergey Nazarov often notes how vital it is for digital assets to evolve from merely minting tokens to actually creating real-world financial products. Products that create value, and more importantly, cost transparency for all parties involved.
How does Chainlink impact blockchain technology?
By using Chainlink, an application developer on Ethereum, as an example, can connect any real world API (Application Programming Interface) to smart contracts built on the Ethereum blockchain. This has huge implications as it enables smart contracts to impact more areas of society.
Take DeFi (Decentralized Finance), as a prime example demonstrating Chainlink's impact. Chainlink's secret sauce is their oracle network, which ensures all data that is used for transactions is consistent and reflective of real market information. Aave and Synthetix, two of the world’s leading DeFi applications, both utilize Chainlink oracles to secure their protocols.
It doesn't stop there. Chainlink has also led the way in emerging areas of blockchain technology, like VRF (Virtual Random Function), which could potentially power new-age video and lottery games. Chainlink's oracles can also provide data used to power NFTs.
Chainlink is involved in several initiatives pushing enterprise blockchain solutions, including the Enterprise Ethereum Alliance (EEA), Hyperledger Avalon, Baseline Protocol and Interwork Alliance (IWA).
Why is the LINK token valuable?
The LINK token derives utility by acting as a means of collateral and payment on the Chainlink network.
Collateral: Chainlink node operators stake their LINK in order to make themselves eligible for data retrieval. By posting this collateral, the node operators have an incentive to perform its function quickly, and more importantly, accurately.
Payment: LINK tokens are used to compensate node operators for delivery quality data.
By using the LINK token in this way, Chainlink has created a very enviable network effect and has aligned incentives for it's participating node operators.
While LINK is an ERC-20 Ethereum token, any blockchain can use an external adaptor to power their smart contract with Chainlink oracles.
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