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Chainlink Crypto Trading Guide: How to Trade the LINK/USD

Date Modified: 26/01/2025

Chainlink provides a universal access point for businesses worldwide to connect with various cryptocurrencies and blockchains. It offers developers the capability to develop Web3 applications that utilise real-world data and execute computations off-chain across any blockchain.

An illustration of a futuristic blockchain concept and the Chainlink coin

Main Points:

  • Chainlink is a decentralised oracle network that bridges the gap between blockchain networks and real-world information, enabling smart contracts to access off-chain data.
  • Chainlink originated from SmartContract, a blockchain tech company and was developed in 2017 under the leadership of Sergey Nazarov, Steve Ellis, and Ari Juels.
  • LINK tokens compensate and incentivise Chainlink node operators who provide data to smart contracts.
  • Traders and investors can trade LINK CFDs on platforms like Plus500 to gain exposure to LINK tokens' rising and falling prices.

What Is Chainlink?

Chainlink is a leading decentralised oracle network (DON) acting as an abstracted blockchain layer that can provide real-world (off-chain) data to smart contracts (on-chain) on any blockchain network, whether Ethereum, Terra, Solana, Cardano, Polkadot, Polygon, etc.

Chainlink originated from SmartContract, a 2014-established blockchain-oriented startup. The project's development started in September 2017, led by Sergey Nazarov, Steve Ellis, and Ari Juels, who all co-authored the Chainlink white paper.

Why Was Chainlink Created?

To fully understand the purpose of the Chainlink decentralised oracle network (DON), it is important to understand several key, interdependent concepts, starting with smart contracts.

What Are Smart Contracts?

Smart contracts are self-executing contracts on the blockchain that automatically enforce predetermined terms when specified conditions are fulfilled. Blockchain technology provides a level of security and transparency to smart contracts, ensuring that they cannot be altered but are publicly accessible. This guarantees that all parties involved can verify the accuracy and conditions of their contract.

The Problems With Smart Contracts On Blockchain

A major limitation of smart contracts on blockchain technology is their dependence on external data, such as price feeds or web data, to execute functions. This required data is not present on blockchains, and smart contracts cannot acquire external data independently. Hence limiting their use cases.

The Solution: Chainlink Decentralised Oracle Network

The process of efficiently transferring data into a blockchain requires using a software component known as an "oracle," which handles the data input process.

This is where Chainlink comes into play. Chainlink extends beyond the role of a mere oracle. It adopts a model akin to blockchain technology, employing a decentralised network of independent oracles designed to facilitate secure and reliable data transfer between blockchains and external systems.

These oracles collectively gather data from diverse sources, consolidate it, and provide a validated single data point to the smart contract, thus ensuring that contracts are executed without centralised vulnerabilities.

How Does Chainlink Work?

When a user requires off-chain data for their smart contract via Chainlink, they initiate a request. The Chainlink system responds by generating a service-level agreement (SLA) that contains three distinct sub-contracts, each with a specific role:

  • Reputation Contract: Evaluates the performance history of oracles and eliminates those deemed untrustworthy.
  • Order-Matching Contract: Sends the request to available oracles, gathers bids, and chooses the oracles best suited for the task.
  • Aggregating Contract: Collects the data provided by the selected oracles and verifies it. If the majority of oracles offer consistent data but a few differ, it disregards the outliers.

Chainlink's capability extends beyond its internal oracles, as it can access data from external sources through Chainlink Core software and additional adapters.

What Is the Role Of LINK Tokens in Chainlink?

Chainlink node operators receive LINK tokens as compensation for providing requested data to smart contracts. They determine the fees for their services based on current market conditions and the level of demand for data.

Additionally, node operators stake LINK to demonstrate their commitment to the network. This staking model, which is similar to Proof of Stake (PoS) systems, incentivises operators with LINK rewards to promote honest behaviour and discourage malicious activity.

Applications and Use-Cases of Chainlink

  • Decentralised Finance (DeFi): Defi Products such as loans, payments, and derivatives dApps rely on chainlink price oracles to provide external data, such as asset prices and interest rates, for executing trades, calculating collateral ratios, and triggering liquidations.
  • Insurance: In the agricultural sector, Chainlink is used to supply weather data that determines whether crop insurance claims should be paid out, based on predefined criteria like rainfall or temperature levels.
  • Gaming: Chainlink VRF ensures that random numbers used in games are not only unpredictable but also verifiable on-chain, giving players confidence in the fairness of the game. It is also used in the creation of unique non-fungible tokens (NFT).
  • Supply Chain Management: Chainlink Oracle ensures the integrity and transparency of supply chain data by providing verifiable data feeds that track the movement and condition of goods and other critical data points that need to be recorded and verified on the blockchain.

Factors Affecting Chainlink Token (LINK)

  • Market Conditions: The broader cryptocurrency market trends and sentiment in the crypto space significantly impact LINK's price and many tokens collectively.
  • Supply Dynamics: LINK has a fixed supply, with 35% of tokens yet to be allocated. This controlled supply can increase LINK value, especially as the circulating supply grows in response to demand.
  • Chainlink's Utility: As more decentralised finance (DeFi) applications and blockchain projects adopt Chainlink's oracles, the value of LINK is poised to grow correspondingly with demand.
  • Ethereum's Influence: LINK adheres to the ERC-20 token standard on Ethereum and operates on Ethereum's blockchain. This means that LINK can fluctuate correspondingly to Ethereum's price movement.
  • Volatility: Cryptocurrencies are known for their volatility, and LINK is no exception. This volatility makes it difficult to predict LINK's future price accurately.

How to Trade Chainlink Cryptocurrency (LINKUSD)

The market capitalisation of the cryptocurrency sector has grown substantially since its inception, driven by wide adoption and influx of capital into altcoins. This has led to an increased popularity of digital assets as financial trading instruments. Traders and investors can gain exposure to Chainlink (LINK) through CFDs (Contracts for Difference). LINK CFDs are financial derivatives that allow traders to receive cash settlements based on the price difference between the opening and closing of their positions.

Unlike crypto exchanges or wallets, when trading Chainlink (LINK) via CFDs, you can either:

Chainlink Trading Hours

The cryptocurrency market operates 24/7, providing continuous opportunities for traders to get exposure to cryptocoins. On the Plus500 platform, traders can buy and sell Chainlink CFD 24 hours, every day, including weekends (except for a one-hour break on Sundays).

*Please note that trading hours may vary depending on the platform provider.

Steps to Buy and Sell Chainlink Coin CFDs (LINKUSD)

To trade LINKUSD CFDs with Plus500, follow these steps:

  • Create a trading account and login to the trading platform.
  • Identify Chainlink (LINKUSD) among the available cryptocurrency markets.
  • Evaluate LINK/USD price using technical indicators and fundamental insights.
  • Decide on the number of CFD contracts you want to buy or sell.
  • Set your order parameters (market order or limit order).
  • Set up your stop-loss and take-profit targets.
  • Review and confirm your trade.

Conclusion

Beyond connecting smart contracts to data, Chainlink 2.0 extends its services beyond connecting smart contracts to data, enabling off-chain computation, payments, and events. This expansion paves the way for a new class of "hybrid" smart contracts, with Chainlink nodes at the core. Chainlink (LINK) holds immense potential for developers and traders, yet its price is influenced by various factors, including supply dynamics, volatility and Ethereum's influence.

Ready to start trading LINK CFDs? You can set up a demo or live account and trade LINK CFDs with Plus500.

FAQs

Chainlink is not a blockchain network -- instead, it is a set of interoperable oracles running on many different blockchains simultaneously.

LINK was launched as a token in September 2017, following Chainlink's ICO, which raised $32 million.

Out of the 1 billion LINK tokens issued at launch, 350 million were allocated to token sale investors, 300 million were reserved for the token's parent company, and the remaining 350 million were set aside as rewards for node operators and ecosystem participants.

Chainlink is ranked 15th among the top cryptocurrency projects As of December 2024 and is worth a market capitalisation of approximately $12.7 billion.

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