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.

ChainLink-santiment

Source: Santiment

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.

chainlink-gas

Source: ChainLinkGod

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%.

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