Trending Oracle Projects: Which Tokens May Surpass Chainlink (LINK)?

Based on social media activity, Oracle tokens have been the top trending narrative in the past few weeks. Chainlink (LINK) remains the leader, but competition is rising, producing tokens with simple use cases. 

Based on Dune Analytics data, Oracle tokens had relatively low returns of 9% in the past six months. On average, oracle tokens had a volume of $20M. The new trend may extend those numbers, as memes or other DeFi narratives have overshadowed so far oracle tokens. As RWA rose, the Oracle narrative index also increased since Oracle usage is often linked to the tokenization of real-world assets. 

Also read: Chainlink (LINK) Rallies After Launching Research with Top Finance Industry Bodies

In May, oracle tokens shifted their performance, expanding against Bitcoin (BTC). In the year to date, the Bitcoin narrative overshadowed oracles, and only in the past four weeks the trend shifted. After the narrative shift, niche oracles achieved outsized gains, while LINK continues to grow more gradually. 

The Oracle space, however, may extend the trend as LINK prepares for another attempt to break out above $20. 

Oracle Tokens Connect with Specific Projects

Chainlink was the oracle producer that aimed to connect as many projects as possible. The goal was to serve many DeFi startups while linking the traditional financial sector. 

Among the top oracles, Tellor (TRB), API3, and UMA have the strongest dollar performance. 

Pyth (PYTH) aimed to be a high-profile oracle project, but its price also missed the expansion in May. Pyth was also the project that expressed the most competitive remarks against Chainlink. Over the past months, Pyth managed to secure decentralized projects and provide pricing information. One setback was a network outage, which broke down some timely price services. 

Which Oracles Have Advantages Against Chainlink?

Chainlink secures 390 projects on 17 blockchains, with a value of $26.4B. However, Chainlink isn’t the top player in every aspect, as other specialized oracles have influence in different areas. 

Pyth secures only 194 projects, but has spread to a total of 55 blockchains. This oracle startup takes into accounts multiple platforms, not all of them compatible with Ethereum. 

Also read: Chainlink (LINK) Integrates New Services for Six Blockchains

Redstone oracle catches up with Pyth, linking its services to 55 blockchains, and will service only 38 projects. 

UMA, one of the newly trending oracles, secures only eight projects but has a focused selection of blockchains. UMA focuses on securing chains for decentralized finance, with a special focus on Polygon, Optimism, and Arbitrum – the top choices for scalable DeFi. 

Some Oracle Tokens Keep Lagging

The winners of the oracle trend are only the most liquid and high-profile tokens. Unlike meme assets, oracle tokens are often scrutinized for real usage. Newer tokens must also show they are important for DeFi or other tasks, as pure hype does not support buying. Oracle tokens have a market cap above $17B, with notable expansion in the past few weeks.

LINK continues to lead the sector’s trend, but API3 and Band Protocol (BAND) are progressing. 

The growth of oracles has also entered a stage of rapid development, where even days are making a difference. 

We just blasted off to $1 BILLION TVS. 🎉

That's 10x in less than 100 days.

API3 is redefining the oracle landscape with our developer-first approach.

Our first-party oracle architecture is built for a rollup-centric future, with swift horizontal expansion to new chains… pic.twitter.com/FVN6yE6yF0

— API3 (@API3DAO) May 22, 2024

The API3 Oracle project also targets developers directly, building tools to add Oracle data to their smart contracts. Most recently, API3 added Injective to its list of blockchains, opening a building pack for developers. 

Pyth Network’s strategy involves connecting to niche DeFi projects and expanding its influence to other startups with growth potential. 

Tellor (TRB) also secured high-profile networks, most notably the recently trending ZKSync Era. Projects on BOB blockchain, another hot L2 network, will also use Tellor’s services. Multiple other narratives may also extend the Oracle trend. 

The trends and narratives include RWA, DeFi, DEX trading, and new L2 blockchains seeking a future-proof oracle provider.

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Cryptopolitan reporting by Hristina Vasileva