DeFi Ethereum

Chainlink Digs Into Q2 2020 as a Rising Star in the Cryptoeconomy

LINK's performance is powered by the growing passion of the LINK community, the dynamism of which is helping the Chainlink project to accrue attention, partnerships, and a widening network effect
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In short order, decentralized oracle project Chainlink has ascended impressively in Ethereum’s decentralized finance sector. Notably, then, as of this week the project now seems safely poised to be a major force within the cryptoeconomy going forward.

Why? In recent years, the three top cryptocurrencies per daily trade volume have been bitcoin (BTC), ether (ETH), and Ripple’s XRP. However, across Q1 2020 Chainlink’s LINK token achieved more daily volume than XRP. To say the least, that’s no small feat considering the breadth and passion of the XRP community.

Yet LINK’s latest quarterly performance in kind is powered by the growing breadth and passion of the ultra-determined LINK community, the dynamism of which is helping the Chainlink project to accrue attention, partnerships, and a widening network effect. As Gemini exchange co-founder Tyler Winklevoss relatedly noted last week:

“I really appreciate the passion of the LINK Marines. Their fervor and dedication reminds me of the early Bitcoin and Ethereum communities. Unlike many other crypto armies, they are dedicated to a project that has real promise and technical merit.

Moreover, LINK’s impressive performance in Q1 2020 has been followed up with more impressive activity in the next, and presently ongoing, quarter.

For an example of the continued hot streak, look at how the token is trading just this week. According to cryptocurrency analytics site Messari, at one point on April 21st LINK had the fourth-highest intraday real volume of any asset in the entire cryptoeconomy — specifically to the tune of $66 million USD.

As such, LINK’s performance on that day meant that of all existing cryptocurrencies, only BTC, ETH, and Tether’s USDT stablecoin had more real volume than LINK within the same span. Not too shabby, right?

Other projects would undoubtedly kill for that kind of volume. And to be sure, none of this is to say that the Chainlink team doesn’t still have plenty of work to do with regard to continuing to actualize its wider vision and roadmap. Rather, it seems LINK has now safely entered the upper echelon of cryptocurrencies, and that’s worth highlighting. The token and its underlying infrastructure have come very far very fast.

LINK Soon in Maker Vaults?

MakerDAO is the most successful dApp in Ethereum’s fledgling DeFi arena. With ups and downs along the way, project’s been an early hit in the sector because it allows users to use crypto collateral like ETH to draw out automated loans in the Dai stablecoin.

One major DeFi wrinkle of note to date, then, has been the Maker ecosystem’s efforts to forge the Dai into a bona fide world currency that can be used by anyone, anywhere, and at any time.

Yet the dollar-pegged Dai has been trading a few cents above its $1 USD peg amid a liquidity crunch since last month’s Black Thursday market chop. This instability could be damaging to the Dai going forward, ParaFi Capital argued in a Maker forum post this past weekend:

“We believe this lack of stability and liquidity is translating into uncertainty around using DAI as a decentralized stablecoin in many DeFi protocols. Anecdotally, we have heard a handful of DeFi teams express frustration over DAI’s lack of liquidity/stability, with some opting to use USDC instead. We see this as damaging to DAI’s network effects in the long run.”

Alas, what would help is additional demand for Dai, and ParaFi Capital accordingly argued that such newfound demand could potentially be driven in part by adding Chainlink’s LINK token as an approved collateral type within the Maker system.

“Given its marketcap, liquidity profile, and appetite for speculation, we see value in onboarding LINK into [Maker],” the firm said.

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William M. Peaster is a professional writer and editor who specializes in the Ethereum, Dai, and Bitcoin beats in the cryptoeconomy. He's appeared in Blockonomi, Binance Academy, Bitsonline, and more. He enjoys tracking smart contracts, DAOs, dApps, and the Lightning Network. He's learning Solidity, too! Contact him on Telegram at @wmpeaster

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