3 Key On-Chain Metrics May Explain Chainlink’s Meteoric Rise

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The price of Chainlink’s LINK token has increased 480% since the beginning of 2020/ These three key metrics may explain its rise.

LINK price 2020

LINK price 2020. Source: Nomics.

Is it another pump?

Chainlink has been in the news a lot over the past several months with a number of partnerships and integrations. However, whenever a cryptocurrency or a token experiences rapid appreciation, the crypto community begins to speculate about the underlying causes. Typically, the most popular explanation is that the company behind the asset must be “pumping” it. We decided to look at some key on-chain metrics for the LINK token to determine whether those can explain the asset’s growth.

LINK active addresses, addresses with non-zero balance & exchange balances

LINK active addresses, addresses with non-zero balance & exchange balances. Source: Glassnode.

Number of active addresses up 1,500%

Here we examine three key metrics: number of active addresses, number of addresses with non-zero balance, and the number of LINKs circulating on exchanges. The number of active addresses has increased from 970 on January 1 to 14,255 on July 13 — almost a 1,500% growth. During the same time frame, the number of addresses with non-zero balances has doubled, while the number of LINKs stored on exchanges has decreased by 14 million or 16%. The latter corresponds with a recent report by Flipside Crypto that concluded: “Chainlink has a very engaged community. The fact is that more users are accumulating LINK.”

Bonus: Binance dominance & smart contract activation

There are two bonus observations to consider as well. Over half of LINK’s circulating supply is held in smart contracts. Recently, Michael Anderson, co-founder at Framework Ventures opined that the one of the major reasons for the price spike is “the project’s scaled usage in the DeFi space”. 

Supply in smart contracts: LINK, USDT & ETH

Supply in smart contracts: LINK, USDT & ETH. Source: Glassnode.

Another interesting fact about LINK is that it seems to gravitate heavily towards Binance (BNB). At least, out of all the exchanges tracked by Glassnode, Binance holds the vast majority of the token supply. This can probably be explained by the availability of LINK futures on the exchange. Binance dominates LINK’s trading volume and this metric has only increased over time. 

LINK balances on exchanges

LINK balances on exchanges. Source: Glassnode.

Although we cannot definitively dismiss the popular trope of this being another “pump and dump” scheme, on-chain data suggests that increased usage of the LINK token and overall growth of the Chainlink ecosystem are among the reasons for LINK’s meteoric rise.