(Nick Fewings/Unsplash)
Old habits do indeed die hard, it seems. I used to work as an equity analyst, conducting research and initiating coverage of different companies within the small-cap, oil-and-gas industry.
The process was relatively straightforward:
The fifth step may or may not have been “hope for an investment banking relationship shortly thereafter,” but far be it from me to be cynical.
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At any rate, as part of our ever-expanding efforts to provide value at CoinDesk, I’m resorting to past practices and expanding my crypto coverage universe. What follows is my first attempt to write an equity analyst–style report on a digital asset. Given the often-opaque nature of this space, I think it’s necessary, to a certain extent. Honestly, outside of bitcoin (BTC) and ether (ETH), the general public may have trouble discerning the use case for one versus another.
Keep in mind that this is not financial advice, and, as such, I will refrain from assigning price targets for tokens. It’s essentially an initiation and declaration of asset coverage, using a combination of fundamental, technical and on-chain analysis.
Over time, and as coverage continues, the goal is to provide periodic updates when something pertinent or impactful to the asset occurs.
The first asset, ChainLink (LINK), is a member of the CoinDesk Indices Computing sector and recently appeared on a moving-average screen whereby its 10-period exponential moving average crossed above its 100-day moving average.
Coverage Date: July 26, 2023
Price: $7.53
Market Cap: $7.5 Billion
Circulating Supply: 538 Million LINK
Max Supply: 1 Billion LINK
Comparable TradFi Market Caps: BJ’s Wholesale Club (BJ), $8.61 Billion; Southwestern Energy (SWN), $6.9 Billion
ChainLink is a “decentralized oracle network” (DON) that seems to serve as a bridge between on-chain and off-chain data, essentially linking smart contract platforms with external data sources. Examples of transmitted data often include – but are not limited to – price feeds, along with payment confirmations.
LINK tries to solve the “oracle problem,” which it defines as a blockchain’s “inability to natively pull data from or push data to an external off-chain system.”
Read more: What Is an Oracle?
ChainLink’s network consists of multiple independent, decentralized oracles that facilitate the retrieval and validation of data between on-chain and off-chain sources. The desired result, and ultimately its value proposition, is that the ChainLink network will help developers build better and more efficient blockchain applications that users will benefit from. Security and reliability of data appear to be core tenets of ChainLink.
Its native token, LINK, serves as the payment mechanism on the network itself. ChainLink users pay LINK to access oracle services. Holders of LINK are also able to stake the asset itself for additional returns on various decentralized finance (DeFi) platforms.
The result of ChainLink’s efforts has led to an expanding network of oracles, meant to increase the reliability of data transfer.
One timely feature that ChainLink boasts is its “Proof-of-Reserves” (PoR) offering, meant to bring transparency and verification of third-party reserves. (In other words, proving that firms really have the assets they claim to have.) Paxos, TrueUSD and BitGo are among ChainLink’s PoR customers.
A strategy that some traders may consider is to monitor whether LINK’s price declines toward its 20-day average of $6.92 before increasing and/or decreasing their holdings.
All told, this is the first of a number of assets that we plan to expand coverage on. As we do so, communication with the wider ChainLink community is valued as well, as we attempt to provide our readership with insights about the digital-asset landscape.
From CoinDesk Deputy Editor-in-Chief Nick Baker, here is some news worth reading:
Edited by Nick Baker.
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DISCLOSURE
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The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds. He owns BTC, ETH, UNI, DOT, MATIC, and AVAX
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