Summary: Shorting Chainlink is pretty straightforward, all you need is a crypto exchange that allows for short selling. While there are a few exchanges out there that have added the ability to short crypto, our recommendation is to use eToro. They’re well-known, have a global presence, and are trusted by millions of users from 100+ countries.
We’ll be using eToro in our guide, you can sign up with one of the sign-up buttons below.
Before we get started, let’s quickly explain what shorting is (for those that are new to it). Shorting is the practice of selling a cryptocurrency hoping it will drop in price so you can buy it back later for cheaper… which, if successful, will give you a net profit.
It might sound a bit complex but don’t worry, it’s a lot easier than you might think.
Shorting Chainlink can be done in 4 steps:
- Find a cryptocurrency trading platform
- Sign up with the exchange
- Fund your account with fiat or crypto
- Short Chainlink
1. Find a crypto trading platform
As mentioned before, for this guide we’ll be using eToro as they offer the ability to short the most common cryptocurrencies.
You can, of course, use any other crypto exchange that allows for short selling.
2. Sign up with the crypto exchange
Let’s start with creating an account on eToro.
The sign-up process is very easy, as is the verification that needs to be completed afterwards so you can get started.
3. Funding your account
Next is funding your account. You have several deposit methods to choose from when depositing funds into your eToro Account. These include a bank transfer, credit card, debit card, PayPal, and more.
These are the steps to follow to execute a short sell:
- Go to the search bar at the top, find Chainlink by entering the name.
- On the crypto page/section, on the right side, hit the TRADE button to enter the trading interface.
- At the top of the trading interface: Click on sell to short the crypto.
- Enter the amount for which you want to sell Chainlink and click on “Open Trade”.
Once you’re ready to close the trade, hopefully when the value of Chainlink has dropped, go to your Portfolio, find the Chainlink trade, and click on the red cross to close the trade.
If your assumption/prediction was right, then the profit will be added to your account after closing the trade. If you were wrong on the other hand, you’ll incur a loss which will be debited from your eToro account.
Congratulations, now you know how to short Chainlink!
Disclaimer: Trading, investing, and dealing with digital and cryptocurrencies might involve a lot of risks. Their prices are volatile and performance is unpredictable. Their past performance is no guarantee of future performance.
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Aside from eToro, the other major exchange you can use is Binance.
While Binance tends to be a bit more advanced when compared with eToro, they do have a lot more digital assets to trade with.
Frequently Asked Questions
Yes, you can short Chainlink on Binance. They have over 300 cryptocurrencies on offer, have a decent phone app and a lot of advanced trading features.
Chainlink allows you build decentralized Oracle networks (DONs). This allows you create hybrid smart contracts by bringing real-world data into blockchain networks. These DONs provide decentralized services, such as price fees, proof of reserve and verifiable randomness. They also allow you to connect to any other web API.
It aims at ensuring that the external information (pricing data, weather data and event outcomes) is accurate. and off-chain computations, such as randomness, transaction automation or fair ordering. These are fed to onchain smart contracts and are reliable, tamper-proof.
Chainlink oracle networks can be blockchain-agnostic. They're incentivized with the native LINK token. It is used for node payment and network collateral.
Chainlink is an Open-Source Protocol developed by Chainlink Labs, formerly Smart Contract Ltd., and founded by Sergey Nazarov (formerly Smart Contract Ltd.) in 2014.
The Chainlink Network, which was first launched on Ethereum mainnet June 1st 2019 has expanded to support additional layers 2 networks and blockchains such as Polygon and BSC. Avalanche, Arbitrum and Avalanche.
Before we go into the Chainlink Network function, let's first learn about smart contracts and the workings of oracles.
Smart contracts are programs that use programmatic code to execute actions if a certain event occurs. These smart contracts operate on a Blockchain network. Due to the security model of Blockchain networks, smart contract are isolated from external world and cannot be connected to off-chain systems.
To solve this problem, an additional piece infrastructure is required called an "oracle". This relays data directly from the real world onto blockchain networks. Smart contracts can then consume it.
Chainlink Network tackles this issue via Decentralized Oracle Networks. DONs consist of an independent group of operators who retrieve, aggregate, validate, and then deliver real-world data to the chain. Each Oracle node can specialize and provide decentralized services for smart contract clients.
The Chainlink Network is used for smart contract applications that need access to real data and off-chain computations. Data providers can also sell their APIs through the network to monetize datasets.
Decentralized Finance (DeFi), which requires financial market data, is the most common use case. The Chainlink Network offers many on-chain data feeds which can be used to secure billions of dollars. Aave is a combination of Synthetix and Compound.