ChainLink (LINK) continues its uptrend to become one of the fastest and most increased cryptocurrencies of the year. LINK ranked fifth on top 100 cryptocurrencies by Market Capitalization, recording $5.34 billion, according to CoinMarketCap.
On Wednesday, the price of LINK increased 7.56%, reaching $15.26. It has a volume of $1.39 billion and circulating supply of 350 million LINK.
Before discussing reasons behind the surge and positive trading of LINK, CryptoLydian provides a glimpse of ChainLink.
What Is ChainLink?
Sergey Nazarov and Steve Ellis developed ChainLink as a decentralised oracle network that aims to connect smart contracts with data from the real world.
According to ChainLink website, smart contracts provide the ability to execute tamper-proof digital agreements, which are considered highly secure and highly reliable. In order to maintain a contract’s overall reliability, the inputs and outputs that the contract relies on also need to be secure. ChainLinks provide a reliable connection to external data that is provably secure end-to-end.
In September 2017, ChainLink held an initial coin offering (ICO). As a result, it raised $32 million, with a total supply of 1 billion LINK tokens.
The word “oracle” means that it is not a programming language, but rather a relational database. It’s a system that manages relational databases. It converts information into a database that is useful for decision-making, monitors business performance, and improves productivity.
That’s why, oracle network is able to get information from outside the blockchain and bring it in. It operates as a source of data and information between the blockchain and the outer world.
As an oracle network, the ChainLink platform aims to fill the gap between blockchain technology-based smart contracts and the real world. In short, as blockchains cannot access data outside their network, oracles work to function as data feeds in smart contracts.
Reasons for skyrocketing price of LINK
One of the most important reasons for ChainLink’s rise is its close association with decentralised financing (DeFi).
DeFi is expected to raise the digital currency market associated with this field.
Several reports indicated that it is possible the sudden bullishness of LINK currency is mainly due to the pressure of short contracts in the futures market.
This comes due to the continued rise in the price of LINK, which kept its funding rate below 0%, as it was hovering at -0.02%.
To clarify, the cryptocurrency futures market uses a mechanism called financing to ensure market balance. This means when the market is swinging too far towards buyers, then buyers should motivate sellers and vice versa.
Smart contract users can use the oracle service to retrieve data which attributes the rise of the coin.