Chainlink, a decentralised finance (DeFi) project, is one of the one of the best performing digital assets in July. LINK is the digital asset used on Chainlink’s blockchain network. Since the start of the month, it’s gained over 80 per cent on BTC Markets.

DeFi is an industry movement aimed at providing blockchain based financial services like a bank. These services carry the cost saving and security benefits, amongst others, that blockchain technology provides. It also wants to provide financial services to the 1.7 billion people who currently don’t have access.

The vehicle for DeFi is the Ethereum network. Ethereum allows anyone build ‘decentralised apps’ (DApps) that run over its blockchain. Chainlink is one such DApp. It offers a solution to an issue with blockchain connectivity.

It’s difficult to connect blockchains to external data sources like price information on certain assets, or a payment service. This problem is holding back the adoption of using DApps in everyday life.  However, Chainlink’s solution solves this connectivity issue by using its LINK token. LINK can automatically communicate information between, for example, an online service like PayPal to a DApp.

Due to Chainlink’s success, it has become the poster-token of the DeFi movement. Search interest in the term ‘chainlink’ has peaked from the end of June into July according to Google Trends.

LINK’s price has increase from AU$6.88 to over AU$12 since the start of the month. More impressively, LINK’s market value has gained 246 per cent since the asset was first listed on BTC Markets mid-January.

Source: BTC Markets – Chainlink daily chart.

This interest has had a positive effect on other DeFi assets. Enjin Coin (ENJ) is one example that also runs on Ethereum. ENJ has enjoyed a 118 per cent gain YTD.

Major digital assets

Major digital assets have struggled to keep up with LINK’s movements. Ethereum’s native token ETH has gained 2.8 per cent since the beginning on the month. Bitcoin’s (BTC) price has lost 1.58 per cent of its market value during the same period.

This performance reflects a lack of price volatility. Traders enjoy this market aspect, as varying price movements create trade opportunities. The below chart from analytics firm Skew shows that volatility on BTC’s options markets are at market conditions to capitalise on swiftly varying prices.

Source: skew.com

This may be due to recent gains on traditional equities markets. The S&P ASX Small Ordinaries has rose 1.88 per cent QTD. By comparison, the S&P 500 has returned 4 per cent over the same time. The index’s YTD return has recovering to its pre-pandemic level.

BTC’s market dominance has moved down to 62.4 per cent in the wake of its minor losses. This is the lowest its been since July 2019. LINK’s gain its market capitalisation to the 8th largest digital asset in the world, now valued at AU$4.16 billion. It’s dominance crew from 0.78 per cent to 1.08 per cent this week.

 

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