- Chainlink’s oracle service has become critical to DeFi, and according to the Bank of America, it was the main driver of the wild growth of DeFi over the past year.
- Currently, over $60 billion in DeFi is secured in smart contracts linked to Chainlink oracles as the network went beyond DeFi into NFTs and more.
Decentralized finance (DeFi) was one of the defining trends of the cryptocurrency market in 2021, with the industry shooting up from $18 billion to well over $250 billion last year. While Ethereum gets all the plaudits for the rise in DeFi, and rightly so, a new report is shining a light on the unsung hero of the DeFi movement – Chainlink.
Chainlink is a decentralized network of nodes that feed data from real-world or off-blockchain sources onto blockchain-based smart contracts through oracles. It’s the leading oracle network, with its oracles being used in virtually every other decentralized application.
Read More: What is Chainlink? A Guide to the LINK Token and the Technology of Chainlink
According to a report by the Bank of America (BofA) today, Chainlink hasn’t received enough acclaim for its role in the rise of DeFi. After an investor call with Sergey Nazarov, the founder of Chainlink, analysts at the bank published the report which said that Chainlink will also likely lead the expansion of blockchain into various other sectors including gaming, finance and gambling.
At press time, there’s $208 billion locked in DeFi applications, according to data from DeFiLlama. Curve, a multi-chain DeFi platform, leads the charts with $19.8 billion in total value locked (TVL), with other major players including MakerDAO, Convex Finance, AAVE and Anchor.
BofA: Chainlink sparked the rise of DeFi
DeFi encompasses a lot of services into one umbrella term, but the crux of it is that they are financial services that don’t involve any central intermediary. It can be lending and borrowing protocols like AAVE or even decentralized exchanges like Uniswap.
For these platforms to function without a hitch, they need data from off-blockchain platforms. Take AAVE for instance, a lending and borrowing platform. Being an Ethereum-based platform, it can only source data that’s available on the Ethereum network. However, it requires data such as the prices of various cryptocurrencies from other chains, exchanges and more.
This is where Chainlink oracles come in. These decentralized oracles acquire data from various sources and make it available to these platforms.
According to BofA, the rise of DeFi in 2021 was sparked by “the ability for hybrid smart contracts, or self-executing and tamper-proof digital agreements, to verifiably and securely access real-world data through oracle nodes like market prices, time of day, weather and GPS location.”
As of February 15, there was $60 billion in deposits on smart contracts that’s secured by Chainlink oracles, up from just $7 billion in 2020. Additionally, Chainlink generated at least 2.5 million verifiably random numbers for NFT distribution and gaming. This is a remarkable rise since, in 2020, this number was almost zero.
Read More: Mainstream media channel Associated Press (AP) employs Chainlink to provide real-time news
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