Decentralized finance (DeFi) was one of the defining trends of the cryptocurrency market in 2021. The industry grew from $18 billion last year to over $250 billion. While Ethereum has rightly garnered all the praise for the rise in DeFi, a new report is the unsung hero of the DeFi movement. to Chainlink (LINK) shedding light.
Chainlink is a decentralized network of nodes that feeds data from real-world or non-blockchain sources to blockchain-based smart contracts via oracles. Chainlink is a leading oracle network, with oracles used in almost all other decentralized applications.
Chainlink hasn’t gotten enough credit for its role in the rise of DeFi, according to a report released today by Bank of America (BofA). After an investor meeting with Chainlink founder Sergey Nazarov, bank analysts stated that Chainlink; published a report claiming that it will lead the expansion of blockchain into various other industries, including gaming, finance and gambling.
According to DeFiLlama data, there are $204 billion locked in DeFi apps at the time of writing. A multi-chain DeFi platform Curvetops the pack with a total locked value (TVL) of $19.8 billion, making it MakerDAO, Convex Finance, AAVE and Anchor is watching.
Chainlink fueled the rise of DeFi, according to BofA
DeFi; lending brings many services such as decentralized exchanges under one roof, but the key point is that these are financial services that do not rely on a centralized intermediary.
These platforms need data from non-blockchain platforms to run smoothly.
For example, a lending and borrowing platform AAVEthink about. Since AAVE is an Ethereum-based platform, it can only receive data from the Ethereum network. However, it requires data such as prices of various cryptocurrencies from other chains, exchanges and other sources.
This is where Chainlink oracles come into play. These decentralized oracles collect data from various sources and distribute it to these platforms.
According to BofA, the rise of DeFi in 2021 will include “hybrid smart contracts or self-executing and tamper-proof digital agreements; The ability to access real-world data such as market prices, days of the year, weather, GPS location and time in a verifiable and secure manner”.
As of February 15, there were $60 billion in deposits in smart contracts secured by Chainlink oracles, which is considerably higher than the $7 billion deposits in 2020 alone. Additionally, Chainlink generated at least 2.5 million verifiable random numbers for NFT distribution and gaming. This is a significant increase because in 2020 that number was almost zero.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, KoinFinans and the author of this content cannot be held responsible for personal investment decisions.