Chainlink is a major blockchain project widely used by most decentralized finance (DeFi) and non-fungible token (NFT) developers. It is a relatively different platform from other blockchain networks like Cardano and Ripple. In this article, we’ll explain five reasons why we think Chainlink is a good investment for both the short and long term.
What is a chain link?
Before we identify five reasons why Chainlink is a good investment, let’s explain what the network is and how it works. Chainlink is a network of smart oracles that helps provide off-chain data to on-chain ecosystems such as DeFi and non-fungible tokens (NFTs).
For example, developers who are building a decentralized stock exchange platform need market information for publicly traded stocks. So instead of dealing directly with exchanges, they partnered with Chainlink, which has all this data and tools, to integrate it into their ecosystem.
The same goes for other industries. A good example of these industries is sports betting, which has also been disrupted by blockchain projects. For a decentralized gaming platform to work well, it needs to have access to reliable game data. Chainlink can provide these numbers.
Over the past few months, Chainlink has been adding more solutions to the ecosystem. For example, it recently launched Keepers, a smart contract automation platform. It also introduced proof of reserves, cross-chain communication tools and a VRF platform.
LINK is the governance token of the Chainlink ecosystem. It is a leading cryptocurrency with a market cap of over $5.4 billion and the 26th largest cryptocurrency in the world.
Learn more about how to buy Chainlink.
Chainlink has a strong market share
One reason Chainlink is a good investment is that it has a huge market share in the oracle industry. While the number of oracles in the industry continues to grow, Chainlink is the most popular. It has been embraced by some of the leading players in DeFi, such as Aave, Uniswap, Anchor Protocol, and Curve Finance.
According to DeFi Llama, Chainlink’s Total Secured Value (TVS) exceeds $53 billion, accounting for 54% of the market dominance. The second largest player in the industry is internal, with over $17 billion in TVS, while Maker has only two projects with over $13 billion in TVS.
Therefore, the fact that it has a good market share and brand reputation is a positive catalyst for Chainlink.
Chainlink is an industry leader with huge potential. For example, the total value locked (TVL) in the decentralized finance industry exceeds $200 billion. Considering the industry didn’t exist a few years ago, that’s a remarkable increase.
Although the industry is highly volatile, analysts believe it represents the future of finance. In the future, people will embrace the concept of smart contracts in all areas of financial benefits such as savings and investments.
Analysts expect the DeFi industry to be more than 100 times larger than it is today. So, if this prediction becomes a reality, Chainlink will likely have a role to play in it.
The same is true for other industries set to tokenize. For example, the decentralized gaming industry is expected to do well due to existing regulations in the industry. If this happens, Chainlink will come into play.
There are other industries that would benefit from decentralization. For example, Chainlink has a partnership with the Weather Channel, which means people can use this data to develop their applications.
Chainlink is undervalued
One of the most important things about investing is to always buy relatively undervalued assets. In my opinion, I think Chainlink is one of the most undervalued cryptocurrencies in the world.
At the time of writing, the coin is trading at its lowest level since January 2021. It is also down more than 78% from its 2021 peak. Its market value also fell to just $5 billion.
Therefore, I think Chainlink is a highly undervalued cryptocurrency. On the one hand, it has helped acquire over $54 billion in assets despite its market cap of $5 billion. This shows that it has more room to grow.
The reason it’s underrated is that many people don’t know many details of the platform and what it does.
Correlation with other assets
Another reason you should invest in Chainlink is its strong correlation with other assets like stocks and cryptocurrencies. A closer look at the blockchain industry shows that most cryptocurrencies have fallen sharply over the past few months.
Bitcoin, for example, has risen from around $68,000 in November 2021 to its current level of $38,000. Likewise, Ethereum has risen from around $5,000 to $2,800. Collectively, the market capitalization of all digital currencies has fallen from over $3 trillion to around $1.b trillion.
Other assets such as stocks also fell. This means that the current Chainlink weakness is not an isolated case. This means the coin bounces back when others do the same thing.
Eric Schmidt is a strategic advisor
In the end, Chainlink is a good investment because Eric Schmidt, the former CEO and chairman of Google, is a strategic advisor. That’s a notable thing because he brings a wealth of experience to the network and he has a lot of connections in the right places. As you recall, Schmidt was the man who helped transform Google into one of the most important companies in the world. In a report, the Chainlink founder said:
“Eric’s experience and insights in building a global software platform for the next generation of innovation will be invaluable as we help developers and institutions usher in a new era of economic fairness and transparency.”