Is Chainlink a Good Investment? 5 Reasons We Think It Is
Chainlink is a major blockchain project that is widely used by most developers of decentralized finance (DeFi) and non-fungible tokens (NFT). It is a relatively different platform than other blockchain networks like Cardano and Ripple. In this article, we will explain the five reasons we believe that Chainlink is a good investment for both short-term and long-term investments.
What is Chainlink?
Before we identify the five reasons why Chainlink is a good investment, let us explain what the network is and how it works. Chainlink is a smart oracle network that helps to provide off-chain data to on-chain ecosystems like those in DeFi and non-fungible tokens (NFT).
For example, a developer who is building a decentralized stock trading platform needs a market feed on publicly-traded stocks. Therefore, instead of dealing with exchanges directly, they partner with Chainlink, which has all this data and tools to incorporate it in their ecosystems.
The same is true for other industries. A good example of these industries is sports betting, which is also being disrupted by blockchain projects. For a decentralized betting platform to work well, it needs to have access to credible data on games. Chainlink can provide these numbers.
In the past few months, Chainlink has been adding more solutions to the ecosystem. For example, it recently launched Keepers, which is an automation platform for smart contracts. It has also introduced proof of reserves, cross-chain communication tools, and VRF platforms.
LINK is the governance token for the Chainlink ecosystem. It is a leading cryptocurrency that has a market capitalization of more than $5.4 billion, making it the 26th biggest cryptocurrency in the world.
Learn more about how to buy Chainlink.
Chainlink has a commanding market share
One reason why Chainlink is a good investment is that it has a commanding market share in the oracle industry. While the number of oracles in the industry is rising, Chainlink is the most popular. It has been embraced by some of the leading players in DeFi like Aave, Uniswap, Anchor Protocol, and Curve Finance.
According to DeFi Llama, Chainlink has a total value secured (TVS) of more than $53 billion, giving it a market dominance of 54%. The second biggest player in the industry is Internal, which has a TVS of over $17 billion, and Maker which has only 2 projects with a TVS of more than $13 billion.
Therefore, the fact that it has a good market share and brand reputation is a positive catalyst for Chainlink.
Large market size
Chainlink is a leading player in an industry that has tremendous potential. For example, the decentralized finance industry has a total value locked (TVL) of more than $200 billion. This is remarkable growth considering that the sector did not exist a few years ago.
While the industry is highly volatile, analysts believe that it represents the future of finance. A future where people will embrace the concept of smart contracts in all areas of their financial well-being such as savings and investments.
Analysts expect that the DeFi industry will be more than 100 times bigger than where it is now. Therefore, if this prediction comes to pass, there is a likelihood that Chainlink will have a role to play in that.
The same is true for other industries that are set to be tokenized. For example, the decentralized betting industry is expected to do so well because of the existing regulations in the industry. If this happens, Chainlink will have a role to play.
There are other industries that are set to benefit from decentralization. For example, Chainlink has a partnership with the Weather Channel, which means that people can use this data to develop their applications.
Chainlink is undervalued
One of the most important things about investing is to always buy an asset that is relatively undervalued. In my view, I believe that Chainlink is one of the most undervalued cryptocurrencies around the world.
At the time of writing, the coin is trading at the lowest level it has been since January 2021. It has also declined by more than 78% from its highest level in 2021. Its market cap has also fallen to just $5 billion.
Therefore, I believe that Chainlink is a highly undervalued cryptocurrency. For one, while its market value stands at $5 billion, it has helped to secure more than $54 billion in assets. This is a sign that there is more room for it to grow.
The reason for the undervaluation is that many people don’t know many details about the platform and what it does.
Correlation with other assets
Another reason why you should invest in Chainlink is that it has a strong correlation with other assets like stocks and cryptocurrencies. A closer look in the blockchain industry shows that most cryptocurrencies have declined sharply in the past few months.
For example, Bitcoin has move from about $68,000 in November 2021 to the current $38,000. Similarly, Ethereum has moved from about $5,000 to $2,800. In total, the market cap of all digital coins has dropped from more than $3 trillion to about $1.b trillion.
Other assets like stocks have also declined. This means that the current weakness of Chainlink is not an isolated case. This means that the coin will bounce back when the others do the same.
Eric Schmidt is a strategic advisor
Finally, Chainlink is a good investment because of the fact that Eric Schmidt, the former CEO and Chairman of Google is a strategic advisor. This is a notable thing because of the wealth of experience he brings to the network and the fact that he has a lot of connections in the right places. As you recall, Schmidt is the person who helped to transform Google into one of the most important companies in the world. In a note, Chainlink’s founder said:
“Eric’s experience and insights around building global software platforms for next-generation innovation will be invaluable as we help developers and institutions usher in a new age of economic fairness and transparency.”