Chainlink’s Gas Consumption Keeping ‘Rock Solid’ at 1% Despite the Jump in Feeds & Nodes
The 12th largest cryptocurrency by market cap is currently seeing gains of 3.53% while trading at $4.24, with the rest of the crypto market.
It is one of the top cryptos that is up over 120% in 2020 so far in comparison to Bitcoin’s 30% return.
These gains also coincide with the slight uptick in its daily active addresses. These addresses have been trending up since the past year, as per the Santiment data.
The LINK holders also don't have any intention of selling their tokens in the near future. The top 1% of LINK holders has actually grown by about 25% in the past year.
The holders are withdrawing from exchanges. In December 2017, it saw its biggest transfer to exchanges from 8.6 million to 125 million LINK.
Since a year back, it has been on a constant decline, currently around 70 million. They are either hoarding them or using them in Chainlink smart contracts for off-chain data which has grown by 1.3% YTD.
Chainlink is a decentralized network that provides price feed data to other blockchain networks. It basically provides a solution to the “oracle problem” through off-chain data.
This Ethereum-based platform has been consuming 1% of all gas since mid-March. The percentage of block space gas being consumed by a protocol shows just how much stress an application is putting on Ethereum’s bandwidth.
At Chainlink’s mainnet launch, when it was just with a single price feed (ETH/USD) and three nodes, it consumed 0.33% of Ethereum’s daily available bandwidth. Over 2019, it rose to 3.5% as the price feed spiked to two including BTC/USD with each having 21 oracle nodes.
During Black Thursday, this peaked at 6% when ETH fees skyrocketed only to now remain “rock solid” at 1% despite there now being over 30 price feeds. This could be because of “Chainlink networks moving to a deviation based schedule,” shared ChainLinkGod and CryptoSponge.
In order to create a sustainable oracle network, rewards paid to Chainlink nodes need to be higher than the costs spent by them in delivering the external data on-chain.
Now, because the Ethereum gas fees have been higher than normal lately, the profitability of these nodes has been declining.
Each price feed pays a different amount of LINK rewards to nodes depending on the security of a particular network.
And out of all the price feeds, ETH/USD and BTC/USD are the highest paying ones, which are in high demand by DeFi applications and contain higher levels of decentralization than most networks.
Initially, 33.33% of the total daily payments were paid to the Chainlink core team’s node which has since dropped to just 1.34%.