Chainlink: the booster of crypto rallies

• Integration with the decentralized oracle network, Chainlink , was another trend that could be noticed evolving inside the smart contract platforms on which these apps are constructed.
• Decentralized finance (DeFi) truly took the cryptocurrency business to the next level in 2021, with multiple new protocols and trading platforms developing on Ethereum-like Layer 1s. 

Chainlink

Through the use of oracles, the Chainlink network gives real-world data and information to on-chain smart contracts. Payment mechanisms, price feeds, and other events that are not native to the underlying blockchain are examples of this.

Its numerous agreements have made it one of the most integrated networks in the market, and its functionality is used not just by L1s but also by exchanges such as BitYArd and Kucoin, as well as traditional asset managers such as Gemini.

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2021 was the year of decentralized finance (DeFi)

The year 2021 truly caught the cryptocurrency industry by storm, with the emergence of various new protocols and trading platforms on Ethereum-like Layer 1s. Integration with the decentralized oracle network, Chainlink, was another trend that could be noticed developing inside the smart contract platforms on which these apps are constructed.

A clear correlation cannot be established when looking at the top smart contract platform Ethereum, which hosts the greatest number of existing dApps and was the first to implement Chainlink oracles. Their importance, too, can be seen in how big Ethereum-based market players use them.

While MakerDAO uses price feeds to determine the value of the underlying collateral that supports the asset, stablecoin issuers like Paxos and BitGo use the proof of reserve network to demonstrate the collateralization of their tokenized assets.

Avalanche as one of Ethereum’s primary competitors  

However, a clearer pattern can be seen in Ethereum’s competing blockchains, where DeFi ecosystems are still in their development. Avalanche, whose native token AVAX went parabolic immediately after merging with Chainlink oracles last July, is a perfect example. Even its founder, Jihan Wu, stated at the time that hundreds of projects based on the ecosystem were waiting for Oracle’s capability to be added before releasing their goods.

Avalanche has now become one of Ethereum’s primary rivals, with Bank of America recently suggesting that it might one day overtake the master.

A similar pattern can be seen in the price movement of Fantom’s native token after the network’s integration with Chainlink in August of last year.

Chainlink ecosystem is developing at a fast pace

Solana and Terra, two other significant smart contract platforms, are taking a similar path and have already released the integration on their test nets. ‘Alpha’ anticipates a similar result for these L1s, assuming “active developers and dApps are rolling out on their own chains.”

Chainlink is rapidly expanding its ecosystem, with features like staking and the cross-chain interoperability protocol (CCIP) planned for 2022.

However, these improvements have had a little beneficial impact on Link’s price behavior, which has been stuck in neutral since the crypto meltdown in May.