LD Capital: Funding situation and recent development updates on Chainlink (LINK).

Source: LD Capital

Author: Duoduo, Lisa

Chainlink (LINK) is a leading player in the oracle industry and an indispensable middleware in the DeFi field. This article briefly analyzes its financial situation and recent development trends.

One, funding situation

Basic Information

LINK is ranked 19th in terms of market capitalization, with a market cap of $4.1 billion and a total supply of 1 billion coins. The current circulating supply is 560 million coins, with a circulation rate of approximately 56%. The 24-hour spot trading volume is $220 million.

Price Trend

During the bull market in 2021, it reached its all-time high price of $52. In May 2022, it fell to $7 and has since maintained a fluctuating state. The lowest price was around $5 in 2023, and the highest has been tested several times at $9.5, but failed to break through. The current price is $7.38, a decrease of 86% from its all-time high price.

Chip Distribution

The total token supply is 1 billion, with 35% sold through ICO, 30% allocated to LINK's parent company SmartContract for development, and 35% used to incentivize node operators.

The main purposes of LINK are twofold - to pay the operating nodes for obtaining data for smart contracts, and to serve as collateral for the operating nodes at the request of the contract creator. It is clear that LINK does not have governance rights over the project.

The current LINK circulation rate is about 56%. There is no clear unlocking rule for the remaining unblocked parts, and they are periodically transferred from the Non-circulating supply tagged wallet.

From the following chart, we can see the release situation of LINK tokens throughout history. There were relatively dense token releases from July to August 2019, March to November 2021, and July to August 2022, with one release per week. However, the amount of tokens released each time was relatively small, ranging from several hundred thousand to 1.5 million. There will be large releases in August and November 2022, and March, June, and September 2023, basically maintaining a release every three months, with each release amount ranging from 10 to 20 million tokens. Approximately 84 million tokens have been released from August of last year to present, with a market value of approximately 590 million US dollars calculated at an average price of 7 US dollars.

From the position distribution displayed by Nansen, there are multiple wallets marked as Non-circulating supply, holding approximately 44% of the tokens. In the past 30 days, the wallets marked as Non-circulating supply have collectively flowed out 17 million tokens.

LINK staking address holds 25.47 million tokens, accounting for 2.55% of the total. The recent 30-day increase in staked tokens is 315,000. It can be seen that the token staking scale is still relatively small.

Regarding the trading platform, Binance Wallet holds the most LINK, totaling over 6%. Wallet 0XF97 received 15.5 million LINK in the past 30 days, while wallet 0X5A5 sent out 8.5 million LINK in the past 30 days.

Upbit's marked wallet holds 1.28% of LINK and has seen an outflow of 760,000 tokens in the past 30 days.

In addition, there is a newly created wallet within 1 day with the address 0X95a, holding approximately 4.21 million LINK tokens, accounting for 0.42% of the total. The owner of this address is unknown as it is unmarked.

Market maker Jump Trading holds a total of 4.66 million tokens, accounting for 0.46% and worth approximately $32 million. In the past 30 days, 0X73A has seen an inflow of tokens worth $1.55 million, while 0X2EF has seen an inflow of tokens worth nearly $3 million. The net outflow value is $1.45 million.

Overall, the circulation of LINK's tokens is relatively decentralized. Among the top 40 token holders, excluding project parties and exchange addresses, the two unmarked addresses with the largest holdings respectively hold 0.42% and 0.4% of the tokens. There is no relationship between these two addresses. Market maker Jump Trading has publicly disclosed that it holds a total of 0.46% of the tokens in its addresses, with a net outflow of tokens worth $1.45 million in the past 30 days, which is not a significant amount.

Recent Token Transfer Status

The table below shows the recent 30-day large token transfer situation. The non-circulating supply marked wallet has transferred approximately 17 million tokens to the Binance trading platform. Based on an average price of $7, approximately $120 million worth of tokens have flowed into the market in the past 30 days.

A large account withdrew 4.21 million tokens from Coinbase Custody, with a market value of approximately $29.5 million calculated at an average price of $7. The relevant tokens were then transferred to the wallet address of 0x95a, and the relevant addresses were not marked.

As can be seen, the project team holds a large amount of tokens at their address, and due to unclear release rules, there is a possibility of a large-scale token release to the market in the short term. In addition, after the price increase this time, there are large holders withdrawing a large amount of tokens from the trading platform.

Contract Data

According to data from Coinglass, the LINK contract position is $213 million with a 24-hour trading volume of $629 million. The contract trading volume is about three times that of spot trading. The contract position accounts for about 5% of the overall market value of LINK, which is not considered high.

From the contract data, the price has been fluctuating between $5.8 and $6.5 since the drop on August 18th. On September 18th, the open interest increased significantly, rising more than 50% in a single day, while the price broke through the bottom range.

Afterwards, the position has been adjusted and the growth rate has slowed down, but overall it is still in an upward trend. The token price has experienced 3 rises and 3 corrections, but the overall trend line is still upward.

During the price increase from the bottom, the ratio of long and short positions decreased from 2.5 to 0.89, indicating that there were more short positions. This also means that the average value of long positions is higher than that of short positions, and accounts with higher value have a stronger bullish sentiment.

Decentralized oracle networks (DONs)

DON is a decentralized oracle network consisting of many Chainlink nodes. By introducing multiple independent data provider nodes, the security, reliability, and anti-tampering ability of the data are ensured, and the risk of single point of failure is reduced, making it more difficult to manipulate data. The decentralized oracle feature of Chainlink makes it the preferred data provider for many DeFi projects and other blockchain applications, which has greatly promoted Chainlink's leadership position in the oracle market.

Chainlink's node operators mainly include the following categories:

DevOps Nodes: These nodes are organizations that specialize in running blockchain infrastructure, such as PoS validation nodes, PoW mining pools, and full node RPC providers. These node operators have extensive experience in running critical Web3 infrastructure, managing encrypted private keys, and providing services in exchange for cryptocurrency. DevOps nodes include top staking pool providers such as Fish, P2P Validator, and Staked.

Enterprise Nodes: These nodes are distributed around the world and are currently the backend infrastructure for traditional Web2 economies. They include international telecommunications companies such as T-Systems, a subsidiary of Deutsche Telekom, and Swisscom, as well as global organizations such as LexisNexis.

Community Nodes: These nodes come from the Chainlink community, including winners of the Chainlink Oracle Olympics, CryptoManufaktur, LinkRiver, and NorthWest Nodes.

Chainlink Data Feeds

Data Feed is one of the most widely used features of Chainlink applications. It aims to provide secure, reliable, and decentralized off-chain data sources for smart contracts, and is widely used in DeFi scenarios such as lending, derivatives, stablecoins, and asset management.

Data Feed uses a multi-level data aggregation mechanism.

Firstly, price data aggregators such as CoinGecko and Coinmarketcap perform the first aggregation. These aggregators calculate a volume-weighted average price to ensure the quality of the trading data.

Chainlink's node operators will retrieve price data once from these data aggregators and perform a second aggregation.

The final layer of data aggregation occurs at the DON level of the decentralized oracle network, where all node operators upload their median data and node signatures to generate Off-Chain Reporting (OCR) that is published on the chain. OCR aggregates all the data and stores it in the contract, making it difficult to tamper with once stored. At least 2/3 of the nodes in DON must upload results and signatures for OCR to be accepted on-chain. This mechanism greatly ensures the difficulty of tampering with the final data of the Data Feed.

VRF (Verifiable Random Function)

Chainlink VRF (Verifiable Random Function) is a decentralized random number generation service that provides secure and verifiable randomness for smart contracts. In many use cases, such as gaming, NFT projects, and prediction markets, random number generation is a critical component. For example, Axie Infinity uses Chainlink VRF functionality to ensure that each of the 4088 original Axies is truly randomly generated based on pre-defined probabilities in the smart contract.

CCIP( Cross-Chain Interoperability Protocol )

CCIP is an interoperability protocol used to build cross-chain applications and services. Developers can build their own cross-chain solutions on top of CCIP, which also provides simplified token transfers supported by the decentralized oracle network Chainlink. While CCIP has use cases similar to products like LayerZero, it is not just a bridge with a programmable layer. Hybrid smart contracts will allow for interaction between on-chain and off-chain smart contracts as well as cross-chain execution, making it a bridge between Web 2 and Web 3.

Developers, applications, and enterprises can use CCIP to unlock various use cases, such as:

· Cross-chain tokenized assets: Transfer tokens across different blockchains through a single interface without the need to build their own bridging solutions.

· Cross-chain collateral: Introducing a cross-chain lending application that allows users to deposit collateral on one blockchain and borrow assets on another blockchain.

· Cross-chain liquidity staking token: Bridges liquidity staking tokens between multiple blockchains to increase their utilization in DeFi applications on other chains.

· Cross-chain NFT: Allows users to mint NFTs on the source blockchain and receive them on the target blockchain.

· Cross-chain account abstraction: Building a smart contract wallet with native CCIP functionality to improve the user experience of cross-chain function calls. For example, allowing users to approve transactions on any chain using a single wallet.

· Cross-chain gaming: Create gaming experiences that are not related to blockchain, allowing players to store high-value items on a more secure blockchain while playing games on a more scalable blockchain.

· Cross-chain data storage and computation: Using a data storage solution, users can store any data on the target chain and perform computations on it using transactions from the source chain.

CCIP 主要时间节点如下：

· In August 2021, Chainlink released the Cross-Chain Interoperability Protocol (CCIP).

· On July 18, 2023, CCIP launched its early access phase on Avalanche, Ethereum, Optimism, and Polygon mainnets. Synthetix and Aave are currently using CCIP.

· On July 20th, CCIP opened to developers of five testnets: Arbitrum Goerli, Avalanche Fuji, Ethereum Sepolia, Optimism Goerli, and Polygon Mumbai.

On August 31st, Swift collaborated with multiple financial institutions, including ANZ Banking Group Limited, BNP Paribas, The Bank of New York Mellon, Citibank, Clearstream, Euroclear, Lloyd's Banking Group, SIX Digital Exchange (SDX), and The Depository Trust & Clearing Corporation, to conduct an experiment. Chainlink was used as an enterprise abstraction layer to securely connect the Swift network to the Ethereum Sepolia network, while Chainlink's Cross-Chain Interoperability Protocol (CCIP) achieved full interoperability between the source and target blockchains.

· On September 15th, DTCC (The Depository Trust & Clearing Corporation) and Chainlink explored the functionality of CCIP to help achieve the tokenization of real-world assets. DTCC is a globally important securities settlement system that processes over $200 billion in transactions annually.

· On September 21st, CCIP launched the Arbitrum mainnet.

· On September 28th, CCIP launched the base chain mainnet.

Chainlink Stake v0.2

Pledging is a core measure of Chainlink Economics 2.0 aimed at increasing network security. Pledging enables ecosystem participants (such as node operators and community members) to support the performance of oracle services through pledged LINK and receive rewards.

In December 2022, the initial test version of Chainlink Stake (v0.1) was released, consisting of a 25 million LINK staking pool and supporting ETH/USD data sources on Ethereum.

On the funding side, the project party holds 44% of unreleased tokens without clear release rules and time, which can be released as needed. In the past year, tokens have been released once every three months, with each release ranging from 10 to 20 million tokens. The token supply is relatively large and uncertain. However, the most recent release was in mid-September, so if the release period is three months, the next release time will be in December.

In addition, the token holdings of a single address are relatively dispersed, and the trading platforms are mainly concentrated in Binance, accounting for more than 6%. The address holding coins of market maker Jump Trading accounts for 0.46%.

Recently, a large investor opened a position and withdrew 4.21 million tokens from Coinbase on September 27th, with a market value of approximately $29.5 million (calculated at $7 per token).

On contract data, the position shows a continuous growth trend, and although there have been pullbacks during the upward process, the pullbacks have not fallen below the previous high point. The number of long and short positions has shifted from long to short, and accounts with high value have a stronger bullish sentiment.

Overall, Chainlink has excellent fundamentals and is considered a blue-chip project with a high market capitalization. In terms of token distribution, the project team holds a large amount of tokens, resulting in a high level of uncertainty, while the remaining holders are relatively dispersed. Recently, there have been large investors accumulating positions, with new addresses holding tokens ranking in the top 40. Contract data shows that the number of positions has been steadily increasing, with a slight upward trend. When the price rises, there is a pullback, but it has not fallen below the previous high point, indicating an overall bullish sentiment in the market.

Note: The data in the article is as of September 27, 2023.

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