The market analysis group conducted a quantitative study on Chainlink, a leading decentralised oracle provider. Chainlink was examined upon various metrics. These metrics include its degree of decentralisation, potential correlations between network usage and the price of its underlying cryptocurrency LINK and the impact of the switch in consensus mechanism in Ethereum on transaction fees.
Research Papers
A Quantitative Study of the Activity of Chainlink Transactions on the Ethereum Blockchain
July 21st, 2023
Abstract
This study examines the fundamental aspects of the Chainlink ecosystem on the Ethereum
blockchain: The drivers of the LINK token price, the impact of the switch in consensus mechanism
on transaction fees, and the degree of decentralization within the Chainlink network. Investigating
the dynamics in digital currency prices shows that the number of oracle transactions processed on
the blockchain does not indicate any price increase in the utility token LINK. Further, the analysis
discovers that Ethereum’s switch from PoW to PoS has resulted in a decrease in transaction fees.
It also draws attention to broader implications beyond fees, such as those that affect network
performance, market player behavior, security dynamics, and network congestion. Moreover, the
extent of decentralization in the Chainlink network measured lower Gini coefficients and HHIs
after the OCR model’s implementation in early 2021, showing that decentralization has increased,
as indicated by the data. It is crucial to remember that the results are restricted to the 84 observed
node addresses and could not accurately reflect the complete Chainlink network. Furthermore, the
absence of potentially important nodes should be taken into account.
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