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Chainlink (LINK): The Essential Oracle Network for DeFi

CJ - Cryptocurrency Enthusiast

By offering a secure and trustworthy decentralised oracle network, Chainlink has been important in the establishment and development of decentralised finance (DeFi). This network enables DeFi protocols to function in the real world by connecting smart contracts with off-chain data and external services. Chainlink delivers high-quality and tamper-resistant data by connecting smart contracts with numerous independent node operators. This lowers entry barriers for new DeFi initiatives and promotes innovation in the market.

Despite being a leading oracle in DeFi, the value of Chainlink's native token, $LINK, has struggled to accrue value. This is due to the fact that Chainlink has had to subsidize its services in order to capture crypto market investment share. However, the recently announced proposed collaboration with GMX could be a game changer for $LINK. The proposed partnership involves a new low-latency oracle solution for DeFi derivatives protocols, which solves the challenges of fresh data, private oracle price data and decentralized infrastructure. This new solution helps GMX reduce trading fees and increase efficiency, while also providing a huge security upgrade for the protocol.

The plan calls for allocating 1.2% of protocol fees from the GMX Protocol to Chainlink's low-latency oracle solution, which is used by GMX, for technical support and future development. With Chainlink possibly receiving 1.2% of the fees collected by the majority of DeFi protocols, this might create a new standard for the value of oracles. As a result, this income will eventually go to node owners and $LINK stakeholders, directly boosting $LINK's value accrual. Although it is too soon to predict how this would affect competing DeFi protocols, it is clear that GMX appreciates Chainlink's technology and believes that it is pricey.

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