Blockchain Investor Analysis

Chainlink logo

Chainlink

LINK
Current Price $4.43 (-1.32%)
Chainlink was founded in 2017 to provide a stable and secure connection between off-chain data and on-chain smart contracts, eliminating the need for a central feed via their decentralized oracle network.

Our Rating:

Market

Problem that it solves

Chainlink has identified a lingering issue in the blockchain industry: access to off-chain data sources. Similar to the functions of an API, Chainlink will act as a connector of data sources like APIs, data feeds, bank payments, etc. Chainlink allows the off-chain data to feed directly into on-chain smart contracts.

Customers

Chainlink has quickly amassed a substantial user base. Notable customers include Google, Oracle, and Binance. The smart contract industry is still small but hundreds of tech enterprises could adopt smart contract technology in the future.

Value creation

The customers who adopt Chainlink receive real-time data integration with their smart contracts. Chainlink claims that their decentralized oracle network provides the same security as smart contracts themselves while also streaming live data.

Market structure

The market for this particular SaaS is young and underdeveloped. Their primary customers will include cloud, software, and general tech companies, and other blockchain companies as well.

Market size

The market for smart contract data integration is obviously not mature nor is it even close to a $100 million market. Having said that, this space has huge upside potential in that smart contracts are often seen as the most valuable aspects of the blockchain industry.

Regulatory risks

While there is always the potential for regulatory action against digital tokens, as a true utility token the regulatory risk is rather low.

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Competitive Advantage

Technology/blockchain platform

Chainlink is built on the Ethereum blockchain and the LINK token operates as an ERC-20 token. Ethereum is a well-known blockchain that has stood the test of time.

Lead time advantage

Chainlink is the first venture to provide a decentralized Oracle network for the blockchain industry.

Contacts and networks

Chainlink has made impressive progress over the years, partnering with Google, Intel, and Oracle. Although they have yet to develop contacts on par with companies like Ripple, Chainlink is gaining additional networks via their big tech partnerships.

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Management Team

Entrepreneurial Team

The Chainlink team is composed of software developers and engineers from the likes of Pivotal Labs, McKinsey, and Docusign. Considering Chainlink launched their ICO in 2017, the team has made tremendous strides in the past few years.

Industry/technical experience

Chainlink's CEO, Sergey Nazarov, has been involved in the blockchain revolution since its origins, but the rest of the team does not come close in terms of their work within this industry.

Integrity

The Chainlink team has yet to give critics a reason to question the team's integrity. The fact that tech giants like Oracle and Google would partner with Chainlink shows that these multi-billion dollar companies have trust in Chainlink.

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Token Mechanics

Token required

LINK is an ERC-20 token, with the additional ERC-223 'transfer and call' functionality of transfer, allowing tokens to be received and processed by contracts within a single transaction. The LINK token is used to pay ChainLink Node operators for the retrieval of data from off-chain data feeds, formatting of data into blockchain readable formats, and off-chain computation.

Value added

The LINK token is a requirement for this particular ecosystem because the Node operators must be compensated for their work. Additionally, LINK tokens possess a special property that allows them to be received and processed by smart contracts within a single transaction.

Decentralized

The Chainlink oracle network is fully decentralized, which, in fact, is the feature that sets them apart from their competition. Decentralizing the process allows for additional security measures that prevent faulty data and reduce single oracle vulnerabilities.

Token supply

Over 360 million LINK tokens are currently in circulation. The rest of the LINK tokens are split with 55% used for node operators and ecosystem rewards, and the other 45% allocated to the LINK parent company, Smart Contract Limited. Skeptics of Chainlink point to their massive token supply held in storage as a form of control over the market price.

Public exchange

Chainlink, after partnering with Google, went on a success tour and was listed on Coinbase, Binance, and nearly every other exchange you can find.

MVP

Chainlink launched its mainnet June in 2019.

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User Adoption

Technical difficulty

Customers of Chainlink will be highly sophisticated and progressive technology companies looking to transform their businesses for the future. It is not easy to understand for the average person.

Halo Effect

Chainlink has a strong reputation inside and outside of the blockchain community thank to their partnerships with leading technology companies.

Buzz

Chainlink has recently become one of the more talked about projects in the industry. However, the buzz surrounding does not measure up to some of its more established peers.

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Overall Score

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Blockchain Investor Analysis

The LINK token will be utilized by the companies operating on the decentralized oracle network. The goal is to create a system where smart contracts can have access to real-time data and execute based on that same data. LINK tokens go towards the payment of node operators, ensuring the system runs smoothly.

Chainlink has made impressive strides in a short amount of time, but they face a challenge in finding enough businesses looking for their specific service. As the market grows, Chainlink will either develop their target market and continue their success, or they will be faced with a lacking demand for their service.

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