What is Chainlink?
Summary
Chainlink supplies blockchain applications with data and services from outside their own networks. Its oracle networks help an app use information such as an asset price; LINK helps pay for those services.
- A lending app may need an outside price before it can apply its rules.
- Chainlink provides oracle services across blockchains; LINK helps pay node operators.
- Virtune Chainlink ETP holds LINK as collateral but does not give its holder access to network functions.
Why would an app need Chainlink?
A smart contract can follow its programmed rules, but it cannot by itself know a price on an outside exchange. Imagine a lending app that accepts a crypto-asset as collateral. To assess whether that collateral still covers a loan, it needs a current price. Chainlink Data Feeds publish prices1 for contracts to use.
Chainlink is an oracle network: node operators and data sources supply information2 to applications on blockchains. If the incoming price is wrong, a loan contract can make a wrong decision while following its code perfectly. Reliable outside data is therefore a distinct part of the app's design, not just background plumbing.
Is Chainlink its own blockchain?
Chainlink provides oracle services for applications on other networks3. It is not the ledger where an Ethereum or Solana transaction is recorded. Those blockchains execute and record the app's actions; Chainlink helps supply information the app needs from elsewhere. Chainlink also differs from XRP: XRP can bridge currencies in a payment, whereas Chainlink supplies outside data to apps.
LINK is Chainlink's crypto-asset. It helps pay node operators for their services4 and has a staking role in the network. The LINK paid for an oracle service is distinct from the outside price or other data delivered to an app. More use of oracle services alone does not fix LINK's market price.
LINK directly or through an ETP
A direct LINK holder can store and use the asset in services that support it. Virtune Chainlink ETP offers LINK price exposure through an exchange-traded security without requiring a personal wallet. It is physically backed with LINK held as collateral5. The investor owns the ETP, not LINK available for network use. This ETP does not include LINK staking rewards.
The product is listed on Nasdaq Stockholm, Nasdaq Helsinki, Xetra and the Warsaw Stock Exchange.
Costs when buying Virtune Chainlink ETP
| Cost | Charged by | When |
|---|---|---|
| Brokerage commission | Broker | On every purchase and sale |
| Difference between bid and ask price | Market | On every trade |
| Management fee, 1.49% per year | Issuer | Ongoing, from the product's value |
| Currency conversion | Broker, if applicable | If the product trades in another currency |
Risks to understand
LINK can lose value even while Chainlink services are being used. Direct holding requires wallet or custody decisions; the ETP adds issuer, custody and exchange-trading risks. Physical backing does not stop a price fall. Crypto-assets can lose substantial value6.
Related product
Sources
- Chainlink: Chainlink Data Feeds
- Chainlink: What is a blockchain oracle?
- Chainlink: Chainlink FAQs
- Chainlink: LINK Token Contracts
- Virtune Investor Relations: Collateralization Methodology
- EBA, EIOPA and ESMA (the European Supervisory Authorities): EU financial regulators warn consumers on the risks of crypto-assets
