Bank of America: Chainlink has been the driving force behind the DeFi industry in 2021

Chainlink’s oracle service is critical to DeFi, and according to Bank of America, it has been the driving force of tremendous DeFi growth in 2021. Over $60 billion is secured in DeFi through smart contracts linked to Chainlink Oracles, with the network already moving beyond DeFi into NFTs and other assets.

Decentralized finance (DeFi) has been one of the defining trends of the crypto industry over the past year, which has grown from $18 billion to well over $250 billion in 2021. As Ethereum gets all the credit for DeFi’s rise – and rightly so – a new report shines a light on the DeFi sector’s unsung hero: Chainlink.

Chainlink is a decentralized network of nodes that feed data from real or off-blockchain sources into blockchain-based smart contracts via Oracle. It is the leading oracle network and its oracles are used in virtually every other decentralized application.

According to a new report from Bank of America, Chainlink has not received enough credit for its role in the rise of DeFi. After an investor call with Sergey Nazarov , Chainlink’s founder, the bank’s analysts released the report stating that Chainlink is also likely to lead the expansion of blockchain into other sectors such as gaming, finance and gambling.

At the time of publication of the report, $ 208 billion was locked up in DeFi applications , according to data from DeFiLlama . Curve, a multi-chain DeFi platform, topped the charts with a total value of $19.8 billion. Other major players include MakerDAO, Convex Finance, AAVE, and Anchor.

Bank of America: Chainlink sparked DeFi success

DeFi encapsulates a variety of services under this same umbrella term, but the gist is that they are financial services that do not involve a central exchange. These can be lending and borrowing protocols like AAVE or even entire decentralized exchanges like Uniswap.

In order for these platforms to function smoothly, they need data from off-blockchain platforms. Take AAVE, a lending and borrowing platform. Since it is an Ethereum-based platform, it can only directly source data that is available on the Ethereum network. However, it needs data like the prices of different cryptocurrencies from other chains, chains, exchanges and from other sources.

This is where the Chainlink Oracles come into play. They collect data from different sources and make it available to the mentioned platforms.

According to Bank of America, the rise of DeFi in 2021 was fueled by “the capabilities of hybrid smart contracts, or self-executing and tamper-proof digital agreements, verifiably and securely accessing real-world data such as market prices, time of day, weather, and GPS location via Oracle nodes “.

As of February 15, there were $60 billion in deposits on smart contracts backed by Chainlink Oracles, down from just $7 billion in 2020. In addition, Chainlink generated at least 2.5 million verifiable random numbers for NFT distribution and play. This is a notable increase as this figure was practically zero in 2020.