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Defi Review #3: Chainlink The Global Smart Contract Data Portal

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Chainlink is a decentralized oracle network (DONs) that runs a tunnel to feed real work data into smart contracts. It is one of the most technologically advanced blockchain projects and has increasingly become a more significant part of Decentralized Finance through improving smart contracts to become more dynamic.

Here is a 1 min summary of the article if you want to skip the reading.

What is Chainlink

Created in 2017, Chainlink is a decentralized oracle network (DONs) that provides real-world off-chain data and submits it into smart contracts to improve its functionality. It is a data blockchain to the blockchain. It makes smart contracts smarter. It makes digital agreements dynamic by feeding live data so that smart contracts can continue adopting the real-world data and becomes more relevant to execute.

Why Choose Chainlink

Chainlink is one of the first blockchain applications to integrate off-chain real-world data into smart contracts. Furthermore, it makes smart contract automation feasible. A smart contract is programmed to be a conditional program with sufficient specific conditions to execute.

Goals of Chainlink

Chainlink provides a way to improve smart contracts by feeding off-chain data to improve the smart contracts. It creates a path to communicate with smart contracts to improve the execution. It makes smart contracts more connected to the real world. It becomes a bridge between the internet of things, big data, and blockchain. It becomes a validator of billions of dollars in transaction value worth of data and is facilitated into the blockchain.

Chainlink Focus on Data

Chainlink automates the transfer of data between blockchains and off-chain systems. Their data focus is similar to Google as a provider to the blockchain system. They focus on data quality and enable smart contracts to remove any centralized point of failure. The Oracle networks are collaborative networks run by multiple nodes to reduce the chance of a single failure. They provide high-quality data to improve smart contracts.

Holders From Chainlink

Holders are not equally distributed among different users. However, since Chainlink is heavily technological dependable, node operators have the largest stack of tokens. The second-largest holders are Chainlink developers. As a result, they heavily controlled the tokens. Both node operators and developers held over 50% of the token supply, making Chainlink a centralized influence by their operators and developers. 

Check out my other article: Defi Review #2: MakerDAO The Collective Wealth

Risks With Chainlink

Even though Chainlink tries to resolve a single point of failure on the smart contracts, their token supply is largely controlled by node operators and developers which may create a single point of failure on the operational aspect. In addition, there is no third-party security audit from their codes. Although developers are increasingly active in their code development, you aren’t likely to know how code performs and how secure their blockchain is.

In Conclusion

I think Chainlink makes a bridge between off-chain data to blockchain smart contracts. It creates possible ways to improve smart contracts and makes them more dynamic. However, the way Chainlink operates will create a single point of failure in supplying quality data that defeats the purpose of the blockchain.


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Crypto News

How high leverage crypto lending market collapses

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As the number of crypto lending projects increases, the demand for high-quality banks in this space has also increased. However, the current market is in a tailspin and not much can be done about it. Like other asset markets, such as stock and bond trading or real estate development, the crypto lending market faces multiple headwinds: low-interest rates, rising competition, and regulatory uncertainty. Traditional lenders are unwilling to offer crypto loans at competitive rates or as a package deal. Even if they did deliver it at competitive rates, many others would reject it out of hand. This leaves traditional financial institutions as the only alternative left. To avoid becoming an antiquated sector that cannot support itself, we need more than just more conventional lenders. There needs to be a higher level of leverage on offer so that creative digital assets can become its main attraction instead of simply being another commodity – another loan option. Lenders with leveraged portfolios are necessary even if they do not have the best business practices (e.g., investment vehicles). Weakening the competition will only make things harder for traditional players who have grown accustomed to buying their way into certain industries (e.g., oil) or using other conventional means to reach their goals (e.g., banking).

What is the current crypto lending market worth?

There are over 1,000 crypto lending projects in the market. Some of them have raised more money than others and it is not unusual for projects to generate more than the sum of their (usually smaller) parts. However, the total number of lenders in the market would not be significant without the adoption of blockchain and the payment network it creates. However, the market suddenly collapses in early 2022 due to the market downturn. It makes many people wonder why the market is so fragile. 

The demand for high quality digital banks

New digital banks are opening their doors worldwide and offering loans to customers in various forms. Some common forms of lending include cash-out refinance, termite and mortgage loan, and money market funds. Other assets usually secure these loans rather than security-rated assets. They may offer higher interest payments but the risk of default is also very high.

How big of an impact will the current market have on business confidence?

The amount of money raised through these projects can greatly affect a lender’s business. If the number of lenders increases and the number of projects increases, then the number of do-it-your-self (DIY) loans will increase as well. However, the most significant impact will be on the confidence of the banks in the industry. This will have a dramatic and far-reaching impact on the entire commodities and financial services industry. There will be a loss of vendor relationships, reduced transparency, and a decline in investment confidence in banks. These will hurt all parties, from the lender company to the government. One example is the lending company Vauld. Unlike traditional lending services, crypto lending solely depends on the algorithm to determine the opportunities. It works when the market goes up but it does not work when the market goes down. When valuation goes up, the interest payments are worth less than the company holds. However, the interest payment is worth more than the company has when the market goes down. He suddenly reversed the market, putting the company out of business immediately.

What is next for crypto lending in terms of transparency and regulation?

The crypto lending market is small and has little industry publicity, meaning there is not much regulation or regulation-like regulation that could be applied. However, it would be wise to consider this market a low-hanging fruit, as most regulatory and legal developments occur very slowly in a sector that experiences massive fluctuations in demand and supply.

Bottom line

The demand for high-quality banks in this market is very large. There will be no significant movement in the market with the advent of decentralized, blockchain-based ledgers. And with the advent of more blockchain-based assets, demand for high-quality banks will continue to grow. However, a major event like a government ban on virtual currency will spark a meaningful change in the market. There is little chance of this happening soon. With so much disruption and uncertainty in this sector, it is unrealistic to predict the future of bankine. But one thing is for sure: the use of blockchain in banking will become more common, if not inevitable, in the near future.

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We are in a recession, no doubt?!

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Are we in a recession? Well, it depends on who you are talking to.

The traditional view is when there are two consecutive quarters of decline in a country’s real gross domestic product is commonly used as a practical definition of a recession.

But, the definition of a recession has started changing.

Nowadays, we cannot agree on the definition anymore. Everything is open and up to debate.

All indicators show that we are heading or have already in a recession.

From the government bailout companies to not allowing a recession anymore in the economy, where are we heading if there is no clear guidance on the economy from the government?

So, we are technically in a recession, but we are not in a recession.

And we are heading into an even worse economic cycle:

But that is okay, and we can redefine everything from now on.

Here is the question about a recession, is a recession man-made or a natural process?

If a recession is caused by humans and is a man-made event, the government has the right to change the definition. Since the government has been created collectively to represent the majority of the people in the nation, they have a right as a creator of the collective force to change the definition of the recession.

What if a recession is a part of nature?

Then refusing a recession is a violation of natural law.

I think a recession is man-made, and it is okay for the government to change the definition if they want to. They have to convince citizens that the change is acceptable. 

So, we are in a recession according to the traditional definition, but we may not yet be in the recession if the broader definition claims “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”

https://www.npr.org/2022/07/28/1113649843/gdp-2q-economy-2022-recession-two-quarters

At the end of the day, it becomes a political debate that does not affect people’s daily lives.

https://twitter.com/WallStreetSilv/status/1553062802004353027

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The Froots Are Here and Moving Fast

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froots solana nft

I was surfing through transactions on the Solana blockchain yesterday, and I noticed a large volume moving on Froots NFTs and decided to check things out.

Froots NFTs sold out fast, and the floor started running up. The mint price started at 2.75 Sol on July 21st. When I saw the project and could get in yesterday, the floor was sitting at 4. Last night and today, the Floor has been floating around 5.5 to 6.5.

solana froots nfts

What are Froots?

Froots is a collection of 7,777 fruit NFTs.

Froots, also known as ‘The Vibers of Solana’ is a community driven project of cute froots that aims to spread good vibes and provide its holders with great opportunities, through their different ventures. With Froots, we want to experiment and set a precedent for what can be done between Web2, IRL businesses and Web3. While our main goal is to develop multiple subsidiaries in various industries ranging from F&B, Merch, Books,etc… We will always put our community first and make sure that we’re always innovating and keeping it fun.

Froots

Let’s Breakdown the Froots NFT Project

The project appears to be a fast-release project. A short roadmap section briefly discovers the project and utilities of the NFTs. Froots announced that only 3 of the 6 NFT utilities had been released the other 3 are still a surprise.

What is Driving the Popularity?

It’s all about the community. The Froots has a fantastic community helping to push this project to the top of Solana.

The Road Map

Froots is a multi-venture brand where holders of the genesis NFT collection will be benefiting from each ventures of the Froots umbrella, through our rev-share program. The first subsidiary will be a juices/smoothies company, and the 2nd one is a merch service venture to help projects develop high quality merch that suits their needs and brand image. We have a lot more in stock but we’d rather overdeliver than overpromise, however we can tell you that the future of Froots will include: Merch, 1/1 Charity Auctions, Web 2 + Web 3 partnerships, Lore related projects, Cute art… and VIBES!

https://frootsnft.com/

Suggested Read: The Art Collective Multichain DAO by Metazens – Cryptobite

My Thoughts On Froots NFT Solana Project

I had to jump in on the rise up and make a little profit at least. I love the idea behind it and am curious to see what the other utilities will be. I will also hold at least one just to see where the project goes. They make some cool PFPs for Social Media when all else fails.

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