Chainlink’s LINK tokens have quadrupled in price this year to become one of the biggest success stories this year in cryptocurrency markets.
The project’s market capitalization, now the 12th highest among all digital assets at $2.7 billion, according to CoinGecko, reflects investor perceptions of Chainlink as the leading crypto “oracle” provider. That means it supplies prices and data streams to semi-automated lending and trading systems built atop blockchains.
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The function is crucial in the fast-growing arena of decentralized finance, or DeFi, which has generated such a speculative fervor in recent months that supposed money-of-the-future bitcoin has almost started to look passé.
But now Chainlink’s early lead as the dominant DeFi oracle is starting to attract competitors, and cryptocurrency investors are wondering if the niche industry might be due for a shakeup. Given the key role played by oracles in DeFi, users of the decentralized systems also stand to benefit.
Potential rivals could include dedicated oracle upstarts like Tellor as well as leading DeFi projects like MakerDAO that are developing their own solutions. Another data oracle, Band Protocol, launched a new version of its network on the Cosmos blockchain last month, to avoid congestion on the more popular Ethereum network, on which Chainlink runs. Others in the space include Augur and Nest, according to the industry-tracking website DeFi Pulse.
“I think it’s good that there are different projects that are offering this, obviously,” Niklas Kunkel, head of backend services for MakerDAO, said in a phone interview.
Chainlink has taken a commanding lead among DeFi oracles, a perch that’s been strengthened with frequent announcements of new partnerships and node operators. Just last week, Deutsche Telekom’s IT subsidiary, T-Systems, announced plans to join Chainlink as a node operator. This past Friday, Korean banks IBK Bank, Shinhan Bank, KEB Bank, NH Bank and CenterPrime announced they plan to provide oracle data for Chainlink.
The project even has galvanized a…