Chainlink Lite Review Report: TradeDog
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Chainlink Lite Review Report: TradeDog

April 4, 2020      Trade Dog

Rating – BUY and HODL.

Tradedog Rating : TD++   TD+     TD   TD-   TD–.

Token Statistics

Chainlink Price $2.25 USD
Chainlink ROI  1,336.08%
Market Rank #14
Market Cap $786,582,653 USD
Circulating Supply 350,000,000 LINK
Total Supply  1,000,000,000 LINK
Max Supply No Data
All Time High     $4.95USD(Mar 04, 2020)                             
All Time Low $0.126297 USD (Sep 23, 2017)

Project Overview

  • Chainlink traces its origins back to September 2014, when its parent company SmartContract.com was founded to create a bridge between external data sources and public blockchains. The team eventually developed a product called Chainlink that allows smart contracts to connect to data feeds from any web API and data source.
  • The Chainlink network seeks to bridge external data sources and public blockchains. It connects smart contract platforms to critical off-chain data from markets, events, and payments through its decentralized oracle network. Anyone who has a data feed or any other API can join the Chainlink network and undertake jobs to retrieve and provide data to smart contracts.
  • Node operators are paid in Chainlink tokens (LINK) for their services. Node operators will also be able to stake LINK to service certain smart contract requests that require collateral when staking launches on the main net.
  • Chainlink aims to build bridges between payment services like PayPal and Visa, banks like HSBC and Wells Fargo, and blockchains like Ethereum and Bitcoin. ERC-20 LINK tokens were offered to the public during an ICO token sale in 2017. Chainlink currently resides on the Ethereum blockchain and supports connectivity to other Ethereum dApps. It will soon support more blockchains, as interoperability is the focus of the entire project

 

Problems 

  • Smart Contract Connectivity Problem- The inability of a smart contract to interact with any external data feed or other resources that are running outside the node network in which the smart contract itself is executed. 
  • Privacy, as Sergey Nazarov, co-founder of Chainlink, explained:

Most contracts in the real world simply cannot happen without privacy.” The lack of on-chain privacy outside of more expensive Zero Knowledge Proof (ZKP) designs means that many contracts cannot be redesigned as potentially more efficient smart contracts. Privacy is essential for concealing internal positions and trading strategies, as well as abiding by data privacy laws and regulations.

  • On-chain gas cost- When applications require constant price feeds and/or use multiple Oracles and data sources, retrieving the data can quickly become very costly

Solutions

  • Chainlink seems to provide a secure, decentralized and therefore tamper-proof “blockchain middleware”, while also being an easy way to access the multiple inputs and outputs needed by a complex smart contract. By greatly simplifying how smart contracts can securely access key off-chain resources, Chainlink accelerates the development of increasingly useful smart contracts.
  • Chainlink has therefore implemented two data protection solutions. “Mixicles: Simple Private Decentralized Finance”, Mixicles “use oracles to build simple, privacy-preserving decentralized finance (DeFi) instruments”.
  • Chainlink is currently working on implementing threshold signatures in the Chainlink protocol. These represent a new aggregation protocol that requires only a single on-chain gas charge.

Use cases

Smart contracts today are limited because they don’t know what’s going on in the world. The only way to connect to external resources is through an oracle. Chainlink offers the first decentralized oracle network that gives smart contracts decentralized bidirectional capabilities of receiving external data inputs and sending outputs to other systems. Chainlink also provides the necessary developer tools to construct any oracle design pattern, such as using multiple data sources, multiple oracles, flexible aggregation methods, payment penalties, and reputation services. Some of the important use cases of Chainlink are mentioned below.

  1. Decentralised Finance (DeFi) – Chainlink team analyzed the DeFi ecosystem and outlined how Chainlink (LINK) will contribute to the success of the decentralized financial economy. If the DeFi reaches a billion-dollar value, as ConsenSys recently predicted, Chainlink and its LINK token could benefit massively.

.

The decentralized financial economy (DeFi) has shown continuous growth over the past year, regardless of the bear or bull market. At the time of writing, there were USD 814.84 million in Ethereum (ETH 3.115 million) locked up in all Ethereum-based DeFi projects. Most recently, Chainlink has entered into collaborations with Binance, Synthetix, and Conflux in the field of DeFi.

How can Chainlink help DeFi and benefit from it?

Blockchains are designed to be basically a closed system. They rely exclusively on on-chain data that is already present in the blockchain. This ensures that the decentralized consensus is maintained and cannot be manipulated. However, the use cases of the blockchain are strongly limited by this premise.

For example, price and interest data sets that are created outside a blockchain (off-chain) and that differ in value and format from different sources are not accessible. In addition, the diversity of data makes it difficult for blockchains to obtain reliable data without sacrificing consensus reliability. In this respect, Chainlink.

is a standard, yet customizable protocol for enabling DeFi to securely and reliably connect with off-chain resources.

By using Chainlink, DeFi projects can thus increase the variety of products offered and make the market more attractive to regulated players. In total, Chainlink lists four concrete advantages offered by Chainlink Oracle technology: Connectivity, data protection as well as confidential and cost-effective data.

  • Enterprise Systems: Analyzing data is critical for developing process efficiencies, making business decisions, and creating real-world use cases for smart contracts. Unfortunately, most of the world’s data is processed and stored outside of the blockchain in backend systems, such as data centers. Chainlink facilitates connection to a variety of enterprise systems to enable communication between newer DLT networks and already established backend systems. Some examples of such systems are  Cloud, SaaS, Databases etc. 
  1. Gambling: A multi-billion-dollar industry that’s ripe with potential for smart contract technology. Casinos have long dominated the gambling industry, but the Internet made the first dent in allowing some startups to carve out market share. Smart contracts enable verifiably deterministic outcomes of betting results and provide true transparency that Internet gambling sites are operating with integrity. Its application can be seen in Casino games, Sports, prediction games etc. 

Token Distribution

Chainlink’s token economics is very strong, meaning the token should have immense value if they reach their full potential. There are primarily two use cases for the token,

.

  1. Paying node operators for their services
  2. Acting as collateral insurance on smart contracts

The implications of this are that the higher the token value, the more secure the network becomes, and the higher the network bandwidth is. It also means there is sufficient insurance backing all the smart contracts using the network to execute.

Partnerships

March’20:  Chainlink Partners With Solana 

READ  Cardano Drops 11% In Bearish Trade Since September

Solana is building with Chainlink is a high-frequency oracle that can give a price update every 400 milliseconds — and because of our capacity, we shouldn’t see those kinds of market failures on our network. It’s solving a fundamental problem that we see in the decentralized exchange space.

March’20: Chainlink Chilliz Partners  with Blockchain 

Decentralized oracle provider Chainlink has integrated with sports token Chiliz for instant sports memorabilia. The partnership lets sports clubs mint limited-edition tokens commemorating key events.

March’20: Chainlink Partners  with Ethereum Classic 

Ethereum Classic Labs has announced its partnership with Chainlink (LINK) to bring decentralized oracles and external data to the Ethereum Classic blockchain.

January’20:BetProtocol Partners with Chainlink

Chainlink and BetProtocol announced that they will partner to provide decentralized Esports and Sports Oracles on all of the latter’s gaming platforms.

Oct’19: Binance Partners with Chainlink

Cryptocurrency exchange leader Binance announced their partnership with Chainlink which will help Binance to share its crypto data to other blockchain platforms.

June’19: Reserve Partners with Chainlink

Chainlink and Reserve partner with the focus of bringing more reliable data feeds to smart contracts, specifically with the intention of helping Reserve’s stablecoin.

June’19: Matic Network Partners with Chainlink

Chainlink and Matic Network announced a partnership that would have the oracle network with the latter’s Plasma scaling solutions.

June’19: Google Cloud Partners with Chainlink

Chainlink and Google Cloud announced that the two would work together to make it easier for developers to develop technologies by letting them access cloud data, among other things, on public blockchains using Chainlinks oracles. With this partnership, users can use Chainlink to connect to BigQuery, one of Google’s most popular cloud services.

June’19: Oracle Partners with Chainlink

Chainlink and Oracle announced that they would work together to help startups using Chainlink’s oracles monetize their APIs on the Oracle Blockchain Platform. This partnership will help Chainlink to generate additional revenue streams by selling its data. One more advantage of being a member of the Oracle for Startups program is to receive oracle cloud credits, pricing discounts and access to the Oracle marketing services.

June’19: Dapps Inc. Partners with Chainlink

Chainlink and DApps Inc. announced a partnership that will allow Salesforce users to obtain accurate and real-time data for smart contract management.

May’19: IOST Partners with Chainlink

Chainlink and IOST partnered to bring the oracle solutions to IOST’s developers. The goal to realize cross-chain DApps and foster a wide variety of DApps on the IOST network.

May’19: Hedera Hashgraph Partners with Chainlink

Chainlink and Hedera Hashgraph collaborated with the agenda of serving Hedera’s enterprise-focused public blockchain. The latter will use the decentralized oracle network much like some of the other partners, to gain access to reliable off-chain data for the development of smart contracts.

Competitor Analysis:

In any new, worthwhile market there will surely be competition. In fact, if there is no competition then usually that market is not lucrative. However, when it comes to the competition, Chainlink is far and away the market leader, which is echoed by their partners in their partnership press releases. The decentralized oracle competitors consist primarily of Shintaku and Witnet, while there are oracle market places that aim for decentralization like ZAP and Mobius. These projects are far behind in terms of development, business connections, and implementation. In terms of community engagement, ChainLink lacks behind its competitors and one of the reasons for this is its focus on technology partnerships. But adoption is the key to success and adoption grows exponentially if the community engagement is done right. The team needs to work on adopting more strategies for community engagement.

Chainlink AUGUR MOBIUS AETERNITY
Avg. Trading Volume $100 Million USD $1.52 Million USD $35k USD $751K USD
Price $2.32 $8.529  $0.0036  $0.102 
Rank 14 44 291 86
Market Cap(in mn USD) $789.63  $93.82  $1.84 $30.78 
Type Token Token Token Token
Community Engagement
Facebook 4.2K 17K 2.2K 3.5K
Twitter 46.8K 131K 9.7K 25.3K
Reddit 14K 10K 1.1K 6.3K
Medium 1.5K 8.4K 1.8K 3.2K

Technical Analysis:

Link/USD is in its accumulation zone now between $1.5 USD – $2.5 USD. On Daily time frame the Standard MACD is showing reversal signs which will get the market move gradually which will be the start of the next cycle. The 7-days RSI with the source being OHLC/4 has reached its support bands at 12 points which have proved to be a strong level previously. The band level is at 42 right now, which is a zone of accumulation. Once this accumulation zone ends, the surge will give three times returns from the current value in the span of 3-6 months.

Correlation Vector:

There is no better way to diversify your portfolio when it comes to hedging your investment from unsystematic risk. As the correlation vector states, LINK has a higher correlation with ETH and considering its low valuation, it becomes a valuable asset for an investor who doesn’t have a huge capital base and wants to take advantage of the market movements. Chainlink has low to moderate correlation with other crypto assets making it a crucial component for the portfolio.

  XRP ETH BTC Mobius Augur Aeternity LINK
LINK 0.47 0.91 0.67 0.54 0.58 0.53 1

Team

Sergey Nazarov — CEO :Starting his career at FirstMark Capital, he left to join the cryptocurrency revolution in 2011. He firmly believes blockchain technology has the ability to change the way societies distribute wealth, enforce contracts, and share critical information.

Steve Ellis — CTO: Previously a software engineer and team lead at Pivotal Labs, where he worked on securing sensitive HIPAA compliant data and building scalable payments automation software.

Mark Oblad — Head of Operations: Mark began his career at Gunderson Dettmer, helping manage the growth of leading global hedge funds.

Dan KochisGlobal Head of BD & Partnerships.  Dan was an integral to Alibaba’s first US acquisition, various worldwide strategic partnerships worth over $120MM in annual revenue, and corporate exits totaling over $4bn.

Advisors

Ari Juels — Technical Advisor.

Ari is a professor of computer science in the Jacobs Institute at Cornell Tech and a co-director of IC3 (Initiative for Cryptocurrencies and Contracts). He was previously the chief scientist of RSA.

Andrew Miller — Technical Advisor.

Andrew is a well-known leader in decentralized consensus research and secure blockchain infrastructure. He’s an associate professor of computer science at the University of Illinois and an advisor to both Zcash and Tezos.

Evan Cheng — Technical Advisor.

Evan is one of the creators of LLVM which generates the low-level machine code running every Apple device, as well as much of Google, Nvidia, and Intel. He is currently Director of Engineering at Facebook.

Roadmap 

Chainlink provides a solution that connects the real world to the decentralised technology which is the future of technology. But the project has faced criticism due to the absence of a properly defined roadmap which creates a space for some speculations. Although it has been clearly mentioned in the website that the team refrains from sharing any time frame unless the completion is not clearly visible, it seemingly is a very crucial parameter for all potential investors or hodlers. The team needs to work on sharing their detailed roadmap for the next 4 quarters and a prospective roadmap for the next 3 years.

Conclusion

Chainlink hopes to be the glue that holds together all other blockchains and other technologies. Using oracle nodes to connect external APIs to the blockchain allows for interconnectivity between data, financial, and other platforms. Chainlink currently exists as a mainnet on the Ethereum blockchain. TradeDog recommends a Buy and HODL rating for Chainlink. Let’s understand the reasons behind this recommendation. Traditional markets are struggling to survive, let alone appreciate in value, and blockchain has been establishing itself as a legitimate enterprise technology for the future. Thus it makes sense for institutional and retail investors to consider taking positions in fundamentally sound blockchain-based projects and Chainlink is definitely an investment to look out for. There are multiple factors which confirm our BUY recommendation. Some of these fundamental factors are listed below:.

    1. Crucial Use cases: The first and foremost reason is the crucial use case of the decentralised oracle based technology. Most applications that utilize smart contracts are very limited in functionality because their network is isolated from the legacy systems of enterprise today. While most blockchain startups are aiming to replace legacy systems, Chainlink is uniquely positioned to allow both worlds to support one another, which is promising since the legacy enterprise isn’t going away any time soon and neither is the blockchain as a service. This makes the ground for the strong fundamentals of the project and hence making it a promising investment.
    2. Long Term Vision: Experts of DLT understand that the technology is still in its beginning stages and will take years to fully realize its potential. Hence it is crucial for a project to have a long-term vision which is capable of solving both immediate and long-term issues. As a result, Chainlink is putting a heavy emphasis on their medium-to-long-term vision of providing off-chain computation for smart contracts in groundbreaking new methods known as Trusted Execution Environments or TEE for short. The fact that the Chainlink team is looking at several privacy solutions, several computational features, and constantly working with research institutions like Cornell’s IC3, enables them to remain at the cutting edge of this new technology, which is deeply promising for the future trajectory and success of the project.
    3. Strong team: Chainlink’s founder, Sergey Nazarov, and his company SmartContract have been building enterprise oracles for companies like premier bank messaging service, SWIFT, for years prior to the launch of Chainlink. This success led to two successful POCs for SWIFT. They also have two solid advisors in Ari Juels, a leading PhD security expert from Cornell and former Chief Scientist of RSA, and Evan Cheng, Head of Engineering for Facebook and recently tapped to head the Blockchain Department at Facebook as well
    4. Lack of Competition: As mentioned above in the competitor analysis segment, there is no direct competition to Chainlink and a couple of projects who are trying to build the oracles, are far behind in terms of technological and business development

Chainlink has the potential to be one of the best investment prospects for those seeking assets uncorrelated to the usual portfolio of stocks, bonds, and real estate. Given the crucial need for their product both short and long term, the quality of their team/network, the lack of competition, and the lucrative tokenomics at play, it could pay off to start viewing Chainlink as an important component of investment portfolio similar to Bitcoin and Ethereum, especially given at its low valuation. Hence TradeDOG strongly recommends its users to BUY the token and HODL for a 6 month time horizon. For short term investment advisory on the token, keep following TradeDOG.

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