Chainlink’s link token jumped to record highs on Monday, far surpassing bitcoin’s returns since the start of 2020. The ever-increasing use of Chainlink’s price oracles in decentralized finance (DeFi) is driving the cryptocurrency higher, according to analysts.
The 12th largest cryptocurrency by market value clocked a lifetime high of $5.72 at 11:45 UTC (7:45 a.m. ET) and was last trading at $5.65, representing over 200% gains on a year-to-date basis.
Meanwhile, bitcoin is down more than 50% from its lifetime high of $20,000 reached in December 2017 and has gained only 29% so far this year, according to data source Coin Metrics.
The link cryptocurrency has decoupled from bitcoin, the crypto market leader. Observers are associating link’s massive rally with Chainlink’s increased usage in the decentralized finance space.
“We’re attributing this short-term price spike to Chainlink’s scaled usage in the DeFi space,” said Vance Spencer, co-founder of Framework Ventures, which is one of the largest private holders of link tokens. “The market cap for DeFi projects have quintupled in the last half year, and most of the ecosystem is now relying on (or planning to rely on) Chainlink for connecting on-chain DeFi smart contracts to off-chain data feeds like commodities and crypto price data.“
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Meanwhile, Simon Peters, crypto market analyst at investment platform eToro said, “The crypto asset has been displaying a bullish trend for some time now, with Chainlink making all the right noises by partnering with a number of projects in the decentralized finance (DeFi) space.”
Chainlink is a system of oracles built on top of the Ethereum blockchain that supplies data to decentralized blockchains. For example, if two users bet on the outcome of a binary event, the oracle will tell the smart contract which user won, so it can pay the winning bettor.
With Chainlink, the advantage is that it supplies data to smart contracts in a decentralized way, or from multiple sources. That ensures the security and reliability of the blockchain, which can be compromised in case the oracle depends on a single source. For instance, lending protocol bZx suffered multiple hacks in February as the platform once used Kyber Network as a single oracle, or supplier of asset prices.
Hence, the DeFi industry has turned to Chainlinks. Major names in the DeFi space including Kyber Network, AVA, Graph Protocol, Opium Network, Synthetix and now bZx have integrated Chainlink’s oracles, according to its official blog. Chainlink’s official twitter handle has announced at least two partnerships every week over the last two months.
The cryptocurrency may have received an additional boost from Chainlink’s association with China’s national blockchain project. “The importance of the Chinese government choosing to integrate Chainlink oracles into their national blockchain services…