Chainlink has Already Won the Oracle Wars

Chainlink is undeniably the Oracle gorilla of Web 3.0. While it has competitors, it is miles ahead of them amongst many metrics. It has superior technology, a vast number of partnerships, and has built a competitive moat that is unparalleled. While it started as a Web 3.0 technology with a simple, yet important use-case which is to bring off-chain data in a variety of sectors to complete and confirm transactions on blockchain, it has continued to advance its technology to bridge different blockchains that heretofore couldn’t communicate with each other. This feat is not to be underestimated in terms of complexity of accomplishment. With its innovative technology, Chainlink has managed to secure a significant number of partnerships and integrations, making it a leader in the oracle space. Chainlink, unlike its competitors operates on the most chains, including Ethereum, Polygon, BNB Chain, Avalanche, Solana, Arbitrum, Fantom, Optimism, and others. Chainlink also offers various products like Data Feeds, VRF, Any API, Automation, Node, CCIP, Proof of Reserve, Custom Solution, FSS, Functions, and Data Streams. While there are several competitors in the oracle space, such as Band Protocol, UMA, Nest Protocol, and API3, Chainlink is far ahead in terms of its partnership and growing ecosystem. It currently has almost 1,500 partnerships, dwarfing its closest competitor, which has less than 27. With Chainlink’s BUILD program, it has achieved two critical things: an invitation to other Blockchain companies to join its growing network of partnerships which strengthens the ecosystem through a network effect and “also”, it grows its value because projects who join its BUILD program contribute a portion of their native token to the ecosystem to secure the network. This last feature should not go unnoticed. It essentially not only helps fund Chainlink’s growth without the need for outside Venture capital, but it also makes Chainlink a diversified investment by creating a portfolio effect of a diverse set of crypto tokens. Diversification is key in the nascent crypto space because it allows investors to not bet their capital on the success of one project which can be highly risky; even if those bets are few, they are concentrated. This is the equivalent to investing in S&P 500 rather than a single stock. While any investment goes through cycles, because of its diversification effect, it typically has better risk adjusted returns over the long term. And the “key” words here are “long term”. As they say, “slow and steady wins the race”.

Chainlink’s partnership with SWIFT is seminal. While it may not be winner-take-all in the long-term tokenization of all assets (financial and physical) including the transfer of money and any generalized asset withing a country or cross-border (certainly Ripple and tokenization projects recently launched by JP Morgan), it is undeniable that SWIFT with its dominant role in world interbank money transfer isn’t going to be displaced. Money and its velocity drive world economies and Chainlink is squarely well positioned to be the benefactor of the trillions of monetary and asset values that transact every day.

It should also be of note that companies that attract great technologists and leaders are a significant vote of confidence in the viability and success of a technology company. Former Google CEO, Eric Schmidt is an advisor to the company. Google wouldn’t be where it is (in part) because of Eric Schmidt’s careful shepherding of the company and focus on how the company grew. His participation and endorsement of the project should not go unnoticed. He has continued to advise Chainlink’s founder Sergey Nazarov, the importance of pioneering and venturing into new territories; a direction that he steered Google into as well. During SmartCon, he praised Chainlink's network for its advanced features, scalability, and innovation. Great companies do not get built overnight. Chainlink has taken the steady road in building real technology with multiple and real-world use applications. It is not a one-trick pony. Most great companies start with one “core’ capability and solution that solves a critical problem. In Chainlink’s case, it was to simply connect off-chain data to on-chain transactions that simply don’t have the capacity to store it on-chain due to its sheer size and massive growth. But what is brilliant about what Chainlink did is to use that initial solution and the ecosystem that it attracted to continue to advance its technology to address the myriad of other problems that exist in not just connecting data across chains but to make actual code seamlessly and in an atomic and abstract way allow them to communicate with each other without much effort from a development standpoint. The best and most successful solutions are simple to use yet to achieve that simplicity is incredibly complex (especially in a distributed and cryptographically secure way which is the linchpin of Web 3.0). And Chainlink did just that.

Chainlink has already reached escape velocity and at this point, it will be incredibly difficult (if not impossible) for any of its competitors to eat away at its dominant market share. The ship has already sailed. For investors, (both short and long-term ones), it is important to not only stay abreast of fundamental developments that will drive Chainlink’s continued growth but also track a variety of real-time indicators that also can signal short-term as well as long-term price action. One of the core drivers of prices of cryptocurrencies is sentiment. Most of that sentiment is expressed in social channels like X. Market Prophit tracks real-time chatter by crypto prognosticators on X and derives aggregate sentiment and other indicators for 9,000 cryptos. Below is an example of current sentiment of Chainlink that is derived from overall aggregate conversations on X (this sentiment is called CROWD) as well as a different sentiment indicator from only those X crypto bloggers that get Market Prophit’s proprietary score that measures the accuracy of their crypto calls (this sentiment is called Market Prophit or #SmartMoney). Both indicators are important to watch, and it is the combination of the two that can provide investors with an additional (and sometimes different opinion) as to what the two camps are saying. If both sentiment signals agree (both positive or both negative) then that is a double confirmation giving an investor potentially more confidence and conviction into what is being expressed. But it is also important to watch when these two sentiment signals disagree (one is positive, and one is negative). When this happens, it can signal an inflection point in the potential future price direction and that disagreement can provide an additional insight when an investor is doing research on a cryptocurrency amongst of course other information (fundamental as well as technical indicators).

Currently the sentiments for Chainlink from the CROWD and the Market Prophits are both bullish, which shows strong agreement between the two different camps.