Chainlink Price Prediction | Is Chainlink a good investment?

Blockchain oracle network Chainlink’s native token LINK has been unable to reverse its 14-month slump as the cryptocurrency bear market of 2022 aggravated its prolonged sell-off.

Since hitting an all-time high of more than $52 in May 2021, the token has fallen over 86% from its peak and is trading near the $7 mark as of 2 August 2022.

The Chainlink faithful, known as the ‘LINK marines’ on Twitter, will be hoping that the introduction of staking on Chainlink will help the data-providing network kick-start its next phase of growth.

Let’s dive deep into learning about Chainlink and its native token LINK. You will also find important network updates and Chainlink price predictions for 2022 and beyond.

About Chainlink: Market leader of decentralised oracles

Chainlink is a network of decentralised oracles or data providers that relay information to enable smart contracts to execute, based on inputs and outputs from the real world.

The network was founded by Sergey Nazarov and Steve Ellis in 2017. It has 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. 

“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,” said Chainlink.

The Chainlink 2.0 white paper said the oracle network would 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 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.

News agency the Associated Press, weather data firm AccuWeather, telecoms firm Swisscom and cloud services providers Amazon Web Services and Google Cloud Platform have already launched oracle nodes on Chainlink.

Next phase: Chainlink staking

Chainlink announced the roadmap to the LINK staking mechanism in June 2022. According to a press release, staking of LINK is projected to start later this year with the initial v0.1 release. 

“Staking introduces another powerful incentive and penalty mechanism for Chainlink nodes to consistently generate accurate oracle reports and deliver them to specific destinations in a timely manner,” Chainlink said.

The v0.1 release will introduce a “reputation framework and staker alerting system” where LINK stakers will have the opportunity to get rewards on successfully detecting oracle networks that do not meet obligations outlined in Chainlink’s on-chain service-level agreement (SLA).

It will also feature additional functionality such as stake slashing to promote quality and security, and distribute a portion of network user fees to LINK stakers.

The v2 version will explore a loss protection service, which will protect “participating sponsors when a supported oracle network deviates from its SLA”. Loss protection could become a source of rewards to LINK stakers in addition to staking rewards and network user fees.

According to Chainlink, staking will evolve into a key mechanism for node operators wanting to “gain access to higher-value jobs and more fee opportunities in the Chainlink Network” due to “a reputation-and-stake-based node selection mechanism”.

It should be noted that a form of collaterisation similar to staking already exists on Chainlink, where node operators can choose to deposit their LINK tokens as collateral to insure data delivery services. 

“While the initial implementation of Chainlink staking is designed to minimise risk for participants and create a strong foundation, the long-term goals revolve around scaling Chainlink into a global standard with a growing and sustainable user base, which in turn offers greater opportunity of rewards for stakers who increase the network’s cryptoeconomic security and user assurances,” said Chainlink on 7 June 2022.

Tokenomics: What is LINK token?

Chainlink’s native token LINK is used to pay Chainlink node operators for data used in smart contracts, for formatting of data into blockchain readable formats, for off-chain computation and for uptime guarantees provided by operators.

LINK is an Ethereum-based ERC677 token that “inherits functionality from the ERC20 token standard and allows token transfers to contain a data payload,” Chainlink said.

According to crypto research firm Messari, LINK 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 LINK public sale followed at a unit price of $0.11. The two sales distributed about 350 million LINK tokens.

LINK has a maximum supply of one billion tokens. The token allocation is as follows:

• Initial token sales investors received 35% of maximum supply.
• Node operators and reward incentives were allocated 35% of maximum supply.
• Chainlink’s parent company SmartContracts.com received remaining 30% of LINK’s maximum supply

Data on Etherscan showed that the top 15 LINK-holding addresses were linked to smart contracts. Over 580 million LINK tokens were locked in smart contracts as of 2 August 2022, according to data from Messari.

Meanwhile, CoinMarketCap data showed the circulating supply of LINK stood at about 469 million as of 2 August 2022 and Chainlink was the 24th largest cryptocurrency network with a market capitalisation of over $3.3bn.

Price analysis: 14-month slump of LINK

In the past three years, LINK has gained more than 300%, up from about $1.8 to its current price of about $7.10 on 2 August 2022.

2020 was one of LINK’s best year in terms of price appreciation as the token gained over 1000%. LINK extended gains into 2021 and soon surged to an all-time high of $52.88 on 10 May 2021.

LINK saw intense selling pressure after its all-time high and lost over 60% in the rest of 2021. The token closed the year at $19.50.

LINK’s losses have continued into 2022. The token has posted five monthly losses in the first seven months of 2022 taking its year-to-date losses to over 63%, as of 2 August 2022.

In June 2022, LINK fell to a near two-year low of $5.30. The token has rebounded in July and has added 22% to its value.

LINK was trading 86% below its all-time high on 2 August 2022 at about $7.10.

Data from IntoTheBlock showed 81% of LINK holders were holding their tokens at a loss on 2 August 2022, while 61% of LINK holders held their tokens for over a year.

News: Important Chainlink updates 

• Open Earth Foundation received a Chainlink Grant on 15 July to develop an oracle node that delivers open-access integrated assessment models for carbon pricing.
• Chainlink announced multiple integration of its services across various chains and protocols in July 2022 which included Ethereum layer two Optimism, Solana NFT marketplace Solanart and Cardano-based DeFi network COTI, among others.
• Chainlink DON Hyphen made greenhouse gas flux data from European Union’s space programme Copernicus available to blockchains on 30 June.
• Analytics firm LexiNexis Legal & Professional launched flight status data tracking Chainlink node on 29 June.
• Chainlink reported on 27 June that it has more than 1,000 oracle networks deployed across a number of blockchain networks
• Chainlink Foundation announced on 27 June that it expects not more than 5% of total LINK supply or 50 million LINK tokens to be moved into circulation in the next nine months. The release of LINK tokens will support staking launch and oracle network rewards.
• Chainlink announced its phased Chainlink Staking roadmap on 7 June 2022.

Forecast: Chainlink price prediction for 2022 and beyond

CoinCodex’s short-term Chainlink coin price prediction indicated that the token’s value could surge over 9% to reach $7.87 by 7 August 2022. However, CoinCodex’s one-month Chainlink price prediction on 2 August 2022 saw the token falling further to $6.60.

For the longer term, algorithm-based website Wallet Investor’s Chainlink crypto price prediction expected the token to trade at an average price of $0.93 by the end of 2022. Wallet Investor’s Chainlink price prediction for 2025 expected the token to trade at an average price of $1.459 by the end of 2025.

DigitalCoinPrice was bullish about LINK’s price performance for the long term. According to its Chainlink price prediction for 2030, DigitalCoinPrice expected the token to trade at an average price of $32.63 in 2030.

PricePrediction’s LINK price prediction on 2 August 2022 saw the token trading at $59.57 in five years’ time.

Note that analyst and algorithm-based Chainlink price prediction can be wrong. Forecasts shouldn’t be used as a substitute for your own research.

Always conduct your own due diligence and remember that your decision to trade or invest should depend on your risk tolerance, expertise in the market, portfolio size and investment goals. 

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