Since September, Chainlink (LINK) has risen more than 25%, outperforming Bitcoin (BTC), Ethereum (ETH), and most altcoins. The project is currently one of the leading decentralized blockchain oracle solutions and ranks 15th in terms of market capitalization when excluding stablecoins.
In September, LINK’s price rose by a staggering 35.5%, but in October’s month-to-date performance, LINK faced a 10% correction. Investors are concerned that a break of the $7.20 support level could trigger further downward pressure, which could erase all of the previous month’s gains.
It’s worth noting that the closing price of $8.21 on September 30 represents the highest point in over 10 weeks, but when looking at the bigger picture, Chainlink’s price is still 86% below its all-time high in May 2021. Furthermore, Over the year over the past 12 months, LINK has shown slight growth, while Ethereum (ETH) is up 21.5% in the same period.
LINK Marines put all their hopes on the SWIFT experience
LINK’s rise began after SWIFT, the leading messaging company for international financial transactions, released a report on September 31 titled “Connecting Blockchains: Overcoming Fragmentation in Tokenized Assets,” suggesting that connecting existing systems to blockchain is more feasible than unifying different central cores. . Bank digital currencies (CBDC).
After a series of tests, SWIFT announced its ability to provide a single access point to multiple networks using existing infrastructure. This system is based on Chainlink’s Cross-Chain Interoperability Protocol (CCIP) and is said to significantly reduce operating costs and challenges faced by institutions backing token assets.
Part of the rise in Chainlink’s value can also be attributed to the successful testing of its Australian dollar stablecoin by the Australian and New Zealand Banking Group (ANZ) using Chainlink’s CCIP solution. In a statement dated September 14, ANZ described the deal as a “landmark” moment for the bank. Nigel Dobson, ANZ’s banking executive, noted that ANZ sees “real value” in tokenizing assets in the real world, a move that could revolutionize the banking industry.
On September 21, Chainlink announced the launch of the CCIP mainnet on the Ethereum Layer 2 protocol Arbitrum One, which aims to drive the development of cross-chain decentralized applications. This integration provides access to Arbitrum’s high-throughput, low-cost expansion solution. StarkWare, another prominent Ethereum scaling technology company, has previously used Chainlink’s oracle services.
Changes to Chainlink’s multiple and declining protocol fees have reduced investor interest
However, the flow of positive news was disrupted on September 24 when user @StefanPatatu called out Chainlink on social network The previous arrangement, which required four out of nine signatures to authorize a transaction, was seen as a security measure.
Chainlink responded by downplaying the concerns and stated that the update was part of a regular rotation of the two sites. This explanation did not invalidate cryptocurrency analyst Chris Blake’s criticism that “the entire DeFi ecosystem could be deliberately destroyed in the blink of an eye” if “Chainlink signatories go rogue.”
However, Chainlink’s most important metric, the protocol’s revenue generated from price feeds, has declined over the past four months when measured in terms of LINK.
In September, Chainlink price feeds generated 142,216 links of fees (equivalent to $920,455 USD), a 57% decrease compared to May. Part of this movement can be attributed to a decline in Ethereum’s total value locked (TVL), which fell from $28 billion in May to the current $20 billion, representing a 29% decline. However, this does not explain the entire difference, and may lead investors to question the sustainability of Chainlink’s revenue model.
Related: JPMorgan Debuts Tokenization Platform, BlackRock Among Major Clients – Report
It is important to note that Chainlink offers a range of services beyond generating price feeds and operates on multiple chains, including CCIP, although Ethereum’s oracle pricing services remain the core of the protocol’s business.
In comparison, Uniswap (UNI), the leading decentralized exchange, has a market cap of $2.38 billion, which is 42% less than Chainlink. Uniswap also boasts a $3 billion total value (TVL) and generated $22.8 million in fees in September alone, according to DefiLlama.
As a result, investors have reason to question whether LINK will be able to maintain its $7.20 support level and maintain its $4.1 billion market cap.
This article is for general information purposes and is not intended and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.