Can it reach 2021 highs?

Decentralised oracle network Chainlink’s native token LINK has been on the downturn since hitting record highs in May 2021. After 11 months, the LINK token price remains over 68% below its all-time highs. The blockchain-oracle market leader has failed to breach new highs despite a cryptocurrency market rally in the second half of the 2021.

More recently, LINK has rallied by over 11% in the past month. Chainlink investors remain optimistic about a network seen as crucial to daily operations of blockchain ecosystems that provide blockchain smart contracts with real-world data. They hope that Chainlink’s highly anticipated upgrade to Chainlink 2.0 will spur growth in LINK prices in the near future.

In this article, we discuss Chainlink and its LINK token. We also dive deep into the token’s price action and read analyst commentary to draft a plausible Chainlink price prediction for 2022 and beyond.

Chainlink price forecast: a leading blockchain oracle 

Chainlink is a network of decentralised oracles or data providers that relay data to smart contracts, thereby enabling contract execution based on inputs and outputs from the real world. The network was founded by Sergey Nazarov and Steve Ellis in 2017, and it quickly established itself as the market leader in the blockchain oracle sector.

About three years after publishing its original white paper, the network released an updated version for ‘Chainlink 2.0’ in April 2021 to drive its next phase of growth.

As Chainlink said in its updated white paper: “We foresee an increasingly expansive role for oracle networks, one in which they complement and enhance existing and new blockchains by providing fast, reliable and confidentiality-preserving universal connectivity and computation for hybrid smart contracts. 

“We believe oracle networks will even evolve to become utilities for exporting high-integrity blockchain-grade data to systems beyond the blockchain ecosystem,” 

The Chainlink 2.0 white paper claimed the oracle network will focus on creating multiple decentralised oracle networks (DONs), which consist of a collection of nodes (computing devices). DONs work to transfer data bidirectionally to and fro from existing blockchains, and “enforce correct oracle reports and arbitrate off-chain oracle disputes”. With DONs, Chainlink nodes can now create custom oracle networks that support smart contracts on a target blockchain or on a main chain. 

“DONs are formed by committees of oracle nodes that cooperate to fulfil a specific job or choose to establish a long-lived relationship in order to provide persistent services to clients,” said Chainlink. In fact, news agency The Associated Press, weather data firm AccuWeather, Switzerland-based telecom Swisscom, and cloud services providers Amazon Web Services and Google Cloud Platform have already launched oracle nodes on Chainlink.

The Chainlink 2.0 white paper was the catalyst for LINK’s ascent to a record high of $52.88 on 10 May 2021. By the end of the year, even though exuberance around LINK’s price fizzled out, the total value secured (TVS) surpassed $75bn by the end of 2021 from $7bn at the start of the year. 

Coinbase in a research report published on 17 March 2022 noted a “disproportionate growth” between Chainlink’s TVS and LINK’s market cap. David Duong, head of institutional research at Coinbase, said Chainlink’s oracle activity market share has remained steady at 54% since late 2020 despite increases in internal oracle sources. 

“This may be a clue as to why we haven’t seen a commensurate growth in the value of LINK even as demand for Chainlink’s data and services has grown more than eightfold. Chainlink’s share of the Layer-1/Layer-2/dApps space appears to have plateaued over the past 17 months. Future growth may therefore depend more on the growth of the crypto space itself rather than the partnerships that drove Chainlink’s initial growth phase,” added Duong.

Chainlink analysis: What is LINK token?

According to Chainlink’s original white paper, published in September 2017, the LINK token is used to pay Chainlink node operators for retrieving data from off-chain data feeds for smart contracts, formatting of data into blockchain readable formats, off-chain computation and uptime guarantees provided by operators.

“In order for a smart contract on networks like Ethereum to use a ChainLink node, they will need to pay their chosen ChainLink node operator using LINK tokens, with prices being set by the node operator based on demand for the off-chain resource their ChainLink provides and the supply of other similar resources,” reads the white paper. 

According to crypto research firm Messari, LINK’s token offering launched in September 2017 with a pre-sale offering price of $0.09 per token along with a 20% bonus depending on the time of the investor’s participation. A public sale followed that sold LINK at a unit price of $0.11. The two sales distributed about 350 million LINK tokens, said Messari.

One billion LINK coins are designed to be issued, of which in the initial token sales investors received 35%, node operators and reward incentives have been allocated 35%, and LINK’s parent company SmartContracts.com received the remaining 30%. As of 31 March, LINK is currently trading at $17.75.

Data from IntoTheBlock revealed LINK had a high concentration of whales (holders that own over 1% of a token’s circulating supply), coming in at 62.11% or over 621 million tokens of total circulating supply, as of 29 March 2022. Digital asset manager Grayscale has listed token concentration and competition, among others, as potential risks for Chainlink.

LINK is an Ethereum-based ERC-20 token. Its maximum supply is capped at one billion. Currently, the circulating supply of LINK coins stands at over 467 million, data from CoinMarketCap showed.

Can I stake LINK tokens on Chainlink?

According to Grayscale’s report, Chainlink node operators can stake their LINK tokens as collateral as a way to insure data delivery service. Staking is an optional function that node operators can use to earn additional income.

Staking on oracles like Chainlink is different from Proof-of-Stake (PoS) smart-contract platforms like Cardano and Avalanche. A press release published on 27 July 2021 said: 

“Chainlink’s explicit staking mechanism aims to achieve a fundamentally different goal than staking within blockchain networks.”

According to Chainlink, while smart-contract platforms use staking mechanisms to secure their networks and verify transactions, staking on Chainlink aims to ensure “creation of reliable and tamper-resistant oracle reports that accurately reflect the state of the external world”.

Its current staking mechanism is designed only to protect against malicious attacks to the network at the moment. A comprehensive staking mechanism is under development that will look to provide “crypto-economic security” to DONs and guarantees concerning the validity and timeliness of the external data and off-chain computations for users.

“When fully functional staking goes live, LINK may become an integral part of value accrual on the Chainlink network as fees will likely funnel towards those post-collateral LINK tokens,” said Grayscale.

Duong from Coinbase added: 

“The introduction of super-linear staking could represent an important inflection point for LINK’s tokenomics, which will be worth following this year.”

LINK coin price prediction

As of 30 March, Chainlink is the 24th-largest cryptocurrency network with a market capitalisation of over $8.2bn. Over the last five years, its native token LINK has soared over 8,000% from below $1 to its current price of about $17. 

Since hitting an all-time high of $52.88 on 10 May 2021, LINK has been on a downward trajectory and is about 67% below its record level as of 29 March. Data from analytics firm IntoTheBlock showed that over 60% of LINK holding addresses are “out of the money” at current market prices, which means they are currently holding LINK at a loss.

New York-based digital asset manager Grayscale’s Chainlink Trust, which invests in LINK and has about $5.3m assets under management, is down 34.4% since its inception in late February 2021, Grayscale’s official website showed as of 29 March.

More recently, LINK prices have rallied alongside the broader cryptocurrency market, with prices jumping over 12% in the past month. However, the recent surge has not been enough to help LINK post positive returns in 2022. The oracle-based crypto remains lower by over 17% year-to-date, as of 30 March.

At the time of writing, data from CoinCodex showed LINK’s 50-day and 200-day exponential moving average (EMA) was currently at $15.60 and $14.20, respectively, with the former indicating a ‘buy’ and the latter indicating a ‘sell’. As of 31 March 2022, LINK’s 14-day Relative Strength Index (RSI) was at 74.45, signalling an overbought asset.

Chainlink news: increasing adoption

According to Chainlink’s 2021 report, the market-leading decentralised oracle surpassed total secure value of over $75bn. By the end of 2021, there were over 1,000+ projects using Chainlink’s data feeds.

In 2021, Chainlink launched a service on Ethereum called Chainlink VRF, which provides smart contracts access to the secure “source of on-chain randomness” required to generate non-fungible tokens (NFTs) and for on-chain gaming applications. The Chainlink VRF has expanded to support networks such as Binance Smart Chain and Polygon.

Chainlink has also launched its price-feed support to various blockchain networks such as Arbitrum, Avalanche, Binance Smart Chain, Ethereum, Fantom, Harmony, Heco, Moonriver, Optimism, Polygon, Starkware and xDai.

In December 2021, former Google CEO Eric Schmidt joined Chainlink as a strategic advisor. Later, in February 2022, a unit of the Saudi Telecom Company partnered with Chainlink to launch an oracle node on its network. It was the third telecom company to partner with Chainlink after Deutsche Telekom and Swisscom. 

In March 2022, Chainlink joined hands with blockchain networks including Avalanche, DAOstack, Etherisc, Hannover Re, Pula and Tomorrow.io to form a decentralised autonomous organisation (DAO) called Lemonade Crypto Climate Coalition, which aims to provide weather insurance to subsistence farmers and livestock keepers in emerging markets. The DAO will be built on smart- contract platform Avalanche and will leverage Chainlink’s data expertise. 

Chainlink future price: LINK crypto price predictions 2022, 2025 and 2030

According to a short-term LINK price prediction from Coin Codex as of 31 March, the value of the token could rise by 11.95% to $19.91 by 3 April 2022. CoinCodex added that technical indicators showed the current sentiment for LINK as ‘neutral’, while the fear and greed index indicated ‘greed’ among LINK investors.

“Based on our Chainlink forecast, now is a good time to buy Chainlink,” said CoinCodex.

Chainlink future price prediction from WalletInvestor said the token was a “bad long-term (one-year) investment”. WalletInvestor expected Chainlink value to reach an average price of $9.87 by the end of 2022 and to $2.642 by the end of 2025.

According to Price Prediction’s LINK/USD forecast, Chainlink’s cryptocurrency token could hit an average price of $20.58 in 2022, growing to $64.99 by 2025 and rising further to $433.22 by 2030.

According to Digital Coin’s Chainlink crypto price prediction, it expects the LINK token price to trade at an average of $23.26 in 2022. Its Chainlink price forecast suggested the token could hit a maximum price of $40.60 by 2025 and $84.44 by 2030.

When looking for Chainlink future price estimates, bear in mind that analysts’ and algorithm-based predictions can be wrong. The LINK predictions are based on fundamental and technical studies of the cryptocurrency’s past performance, which offers no guarantee of future results.

It’s essential to do your own research. Always remember that your decision to trade depends on your attitude to risk, your expertise in the market and your investment portfolio spread. You should never invest money you cannot afford to lose.

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