The DeFi system’s growth is one that has continued to be on the rise, at least since 2020. The massive growth of the tokens since the last quarter of 2020 has only shown that the market is preparing itself for an impending boom. The factors driving prices have yet to be unidentified yet, but many believe that the Oracle reliant tokens have outperformed the others.
There was a time when analysts believe that initial coin offerings (ICOs) had a role in driving prices, but the same is not the same. It is also worthy to note that the DeFi space has been one of Ether’s drivers, the token of Ethereum, a network that provides smart contracts to many of its protocols.
Oracles playing an important role in DeFi protocols
Oracles have always been the quiet backbone of the DeFi space. The third-party services are tasked with allowing several smart contracts in a blockchain to receive external data from outside of their terrain, and thus, have been touted as a driving force behind the price surge of tokens for a while now. The third-party services help their clients with blockchain data information ranging from pricing, trading, and transactions related data.
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A typical example of an Oracle is Chainlink, which provides blockchain data and information services to many decentralized exchanges and protocols. The role of oracles cannot be understated, as there is a growing need for the information they provide by many analysts and crypto data information firms. The growing rate of multiple DeFi hacks has also implied that the services of these oracles are indispensable. The data provided by the oracles means that the hackers cannot alternate the data at hand for a long time before normalcy is attained.
Chainlink, Band Protocol are few Oracle projects whose tokens have been on top
The role of Oracles in DeFi projects continues to be one that cannot be ignored. Chainlink (Link) is one of the most important oracle projects borne from the 2017 ICO saga. The project created by Sergey Nazarov had raised about $30 million for the project, building the data technology on a cheap by rewarding its developers with LINK, the project’s token. The Chainlink oracle-themed project’s success had since taken a shine on LINK, whose fortunes have been on the uprising for a while now.
Band Protocol (BAND) is another oracle project providing cryptocurrency data services for a while now. The protocol facilitates information exchange between on-chain and off-chain applications. Its native token is BAND, which has witnessed a rapid price increase in the last few months. Chainlink and Band protocols are a few of the many oracles backed protocols whose tokens have continued to perform in the DeFi space. However, many analysts believe that the oracle backed projects will continue to amass more success, considering the effect of the data backed service on these protocols.