Chainlink, with its native crypto token (LINK) is a crypto token that incentivizes outside data to be transferred over a blockchain network to smart contracts in need of them via a concept called 'oracles'. It works as a middleware or a connection between the external world and the blockchain platform to provide real time data that might be required for the function of some specific smart contract. These external data can be anything from stock prices to interest rates and game scores, whatever the need may be.
It achieves this objective by incentivizing the whole process with the use of its native crypto token, LINK - and collateralizes the network's smart contract agreements. As of today, Chainlink provides its flagship oracle services to hundreds of blockchain platforms and software firms, including the likes of Avalanche, Aave, Ampleforth, Compound, Swisscom, T-Systems, and even the Associated Press.
Launched back in 2017, Chainlink performs its functions with the help of what is known as 'oracles'. Oracles are nothing but entities that connect blockchains to external systems like price feeds, etc - thereby allowing smart contracts to execute their functions based on inputs from outside the blockchain network.
Chainlink is one of the most unique platforms in the market that serve this purpose and has already captured a lion's share of the market already. According to data from CoinGecko, it is the largest by market capitalization in the industry. With a market cap of a little over $3.6 billion, it is the only oracle network so far that has been able to capture and hold on to the billion dollar market cap mark.
So now that you know about Chainlink, let's understand the two aspects of returns that you can expect from investing in Chainlink. With the Okto app, you can earn from Chainlink's native crypto token, LINK in two different ways. The first way is the price appreciation you can gain from holding the token and the second way is earning passive returns out of staking it to a liquidity pool.
Let's look at the first aspect of price appreciation through a simple observation of LINK's price charts.
If you're anybody who's been a participant in the crypto markets, or even have been simply paying attention to the coin and its price action over the past year, you'll know that the coin has had a very tough 2022. In fact, ever since it touched an all-time-high (ATH) of around $54 in the middle of 2021, the token has been on a strong downtrend and all through 2022 has not been able to show any strength whatsoever.
To further add to that, since the crash of the Terra LUNA ecosystem post the UST depegging fiasco, LINK price has been stuck within a range of $5 to $9. While the $5 mark has been a strong support, the $9 region has been extremely strict as a resistance level and hasn't let LINK prices past it even once in the past almost nine months! Even since the beginning of 2023, while the rest of the crypto market has recovered strongly, led by bullishness in Bitcoin - LINK hasn't been able to participate in that as strongly as many other altcoins have.
However, from a fundamental point of view - Chainlink is a very unique blockchain project that has a near monopoly in its sector and thus holds huge potential for the future. However, investors should be extremely careful and conduct in-depth research before putting their money, keeping risk-reward ratios in mind.
From a pure technical point of view, LINK price is well slated to rally up to the $9.5 to $10 level, so about 33% up from current levels. The $10 level will surely act as a level of strict resistance, however of the course of the year if we see sustained bullish recovery in the overall crypto market, LINK can most definitely follow suit soon enough and the next resistance level lies at about $18, which is a 80% jump from the immediate resistance level.
Coming to the second way you can earn from LINK tokens is the passive way in the world of decentralized finance (DeFi). With the self-custodial, DeFi crypto wallet, like Okto, you can safely hold and even stake your LINK holdings to all the available liquidity pools to earn some extra income off of it.
Additional read: What is Yield Farming in Decentralized Finance(DeFi)?
As of writing, the BNB-LINK liquidity pool on the Okto app offers decent returns of up to 2.93% on the coins staked. That being said, it is important to do your own research before investing your money in cryptos or staking your funds in various DeFi protocols.
Values as on 2 February, 2023.