Why is Chainlink ‘linking up’ with Arbitrum?

• Arbitrum developers would be able to run offchain programs on Chainlink.
• Chainlink’s volume dropped while Arbitrum’s jumped.

Decentralized computing platform Chainlink [LINK] has announced its integration with the Arbitrum [ARB] Mainnet, AMBCrypto can confirm. The project made this known in an update released on the 25th of January.

According to the information AMBCrypto received, Chainlink Function would now work on Arbitrum one. With this in place, developers on the Arbitrum ecosystem can connect to any offchain device or system.

This is because Chainlink Functions act as a decentralized compute runtime that’s useful to test, simulate, and run custom offchain logic for smart contracts. 

Development takes center stage while market dumps

Regarding the development, Chainlink Labs Chief Business Officer Johann Eid said that Arbitrum’s important role in the Ethereum [ETH] ecosystem was the reason it went ahead with the integration. Eid said:

“Making Functions available for Arbitrum users is about connecting Web2 and Web3 developers and bridging the gap to allow for shared collaboration, growth, and a shared sense of community.”

Furthermore, AMBCrypto then looked into the development activity at both ends. At press time, Santiment’s data showed that the development activity metric on Arbitrum and Chainlink has grown significantly.

Source: Santiment

The growth here was proof that the developers of both projects were doing a lot of work to keep the network running smoothly. If this metric continues to be at impressive levels, it could serve as a bullish signal for both Chainlink and Arbitrum.

While it might not affect the price, the development activity could help attract new users to the networks.

However, there is no guarantee that the metric will continue to surge at both ends. At some point, upgrades would slow down and the development activity would decrease. 

It’s even at Chainlink’s end

Another metric we checked out was the Herfindahl Index. But this time, the focus was on Chainlink alone. The Herfindahl Index acts as a measure of the decentralization of a network. 

When the score is high, it implies a high supply concentration and distribution is not even. However, a small Herfindahl Index score suggests evenly distributed funds across addresses. 

Source: Glassnode

At the time of writing, the metric was 0.0039. This score infers that distribution on the Chainlink network was relatively even.

In terms of the volume, on-chain data showed that Arbitrum had risen from its lows. As of the 25th of January, Arbitrum’s volume was 504.22 million. But press time data showed that it had increased to 508.72 million.

Source: Santiment

How much are 1,10,100 LINKs worth today?

However, Chainlink had an opposite movement per volume. Between the 25th of January and the time of writing, the volume decreased. 

The decrease in Chainlink’s volume indicates that fewer LINK tokens have been engaged in transactions while ARB usage jumped.