Why is ChainLink (LINK) Flashing a Drop? (ChainLink Zhihu)

08/11/2023 14:27 • Metaverse Matters • 101 views

Why is ChainLink (LINK) flashing a drop? Why is ChainLink (LINK) flashing a drop? ChainLink (LINK) is an ERC20 token based on the Ethereum blockchain, developed by ChainLink. The project launched its mainnet in June 2018 and issued its first native token, LINK, at a price of $0.05. Subsequently, a second contract was released in August for trading. Currently, this contract is still undergoing testing (officially announced that relevant information will be released in the next few weeks), and this time, due to the open-source nature of its smart contract code and no issues, it has caused a significant drop in price, even resulting in short-term liquidation.

But why did the price of LINK show such a trend? According to CoinMarketCap data analysis, LINK has risen by over 6% to $10.9 in the past 24 hours. Since the beginning of January this year, the price of LINK has been fluctuating (ranging from $0.043 to $0.037). As of around 18:45 today, the price of LINK has reached $0.085.

If we consider LINK as a cryptocurrency, then LINK is a decentralized, secure, and scalable network protocol. There are three main reasons why the price of LINK flashed a drop:

First, the network supply is increased by creating addresses before the link community votes to decide whether to destroy them.

Second, the on-chain governance decides whether to reduce supply by destroying rewards.

Third, from the perspective of market value, Bitcoin may be affected. Because these prices are designed to have a “deflationary” mechanism. Therefore, when a certain type of data changes, the “inflation rate” (i.e. demand) will rise. Therefore, once this trend becomes a reality, Bitcoin will become scarcer and more speculative.

The reason why LINK is so popular lies in its technological structure and the design of the consensus algorithm, which gives it the characteristics of an asset or commodity – indivisible, non-replicable, irreplaceable, borderless, and other attributes. Therefore, it is an important criterion for determining the specific attributes of a particular digital currency and other attributes.

For most users, buying LINK tokens does not require actually owning them as collateral. However, while the price of LINK skyrocketed, the underlying application, Link Wallet, was also continuously updated. In the past few weeks, the Link team has released a series of updates. As shown in the figure below, the latest updates of LINK include:

1. A significant increase in the number of new LINK addresses, with the total number of new addresses more than doubling since the end of April.

2. The expectation of a price increase in LINK started shortly before its launch.

3. Compared to the past, the price of LINK tokens has seen a larger increase, but overall, it is still at a historically low level, significantly lower than the bull market in 2017.

Now let’s take a look at why LINK is trending like this.

ChainLink Zhihu

Editor’s note: This article is from Zhihu and was written by a cryptocurrency novice.

On November 18, 2018, ChainLink (LINK) officially launched on CoinMarketCap. After a brief delay, it started its sale on August 5th and currently has a market value of $400 million. According to the latest information, LINK has successfully entered the top 30 rankings on CMC globally and ranks first.

For more project information, please visit the official Zhihu website. What is LINK? LINK is a blockchain smart contract platform. LINK aims to provide the functionality of on-chain asset queries and verifications and connect cryptocurrency, blockchain networks, and other digital services. By linking external data sources, it achieves a decentralized data exchange mechanism.

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Why is ChainLink (LINK) Flashing a Drop? (ChainLink Zhihu)

ChainLink Zhihu

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