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Chainlink Multisig Wallet Change: Dangerous for DeFi?

Published September 25, 2023 9:28 AM
Teuta Franjkovic
Published September 25, 2023 9:28 AM

Key Takeaways

  • Chainlink faced criticism for reducing the required number of signers on its multisig wallet from 4-of-9 to 4-of-8.
  • The new multisig requirement now mandates four out of eight signatures to approve a transaction.
  • Crypto expert Chris Blec expressed concerns about potential centralization risks associated with this change.
  • Blec highlighted the potential impact on key DeFi projects that rely on Chainlink’s oracles for price data.
  • Despite the controversy, Chainlink’s native token (LINK) has had a strong performance by jumping by 15% last week.

Chainlink, a decentralized oracle network, has played down a recent modification to the number of signers needed on its multisig wallet. This action drew criticism on social media from outspoken detractors.

Chainlink did not immediately respond to a request for comment.

Community Criticizes on X

Many users on X (formerly known as Twitter) criticized Chainlink for covertly lowering the number of signatures needed on their multi-signature wallet from 4-of-9 to 4-of-8. Crypto expert Chris Blec  was among them.

A security mechanism known as the 4-of-8 multisig requirement necessitates four out of eight signatures in order to approve a transaction.

In a post on September 25th, Blec called attention  to an original post from an anonymous user that revealed a wallet address had been deleted from the multisig wallet without Chainlink making any kind of statement.

Blec has long been a vocal opponent of Chainlink, even claiming that if its signers were to ever “go rogue,” “the entire DeFi ecosystem can be intentionally destroyed in the blink of an eye.”

Blec argues that Chainlink, a key component for price data in prominent DeFi projects like Aave and MakerDAO, introduces centralization risks.

Chainlink, a decentralized oracle network, enables Ethereum smart contracts to interact securely with external data and services beyond the blockchain’s boundaries.

Based on data from Cointelegraph, the token has exhibited strong performance in recent weeks, with a 20% increase over the past month.

LINK Jumps by 15% In a Week

In the last week, Chainlink [LINK] has outperformed  the rest of the cryptocurrency market, with a 15% price increase . In contrast, the two biggest cryptocurrencies by market capitalization, Bitcoin [BTC] and Ethereum [ETH] have stayed largely stable throughout the same time span.

The increase in demand for the alternative currency and the number of addresses conducting LINK trades on a daily basis have both contributed to the price increase.

According to statistics gathered from on-chain data provider Glassnode , the daily counts of active addresses trading LINK as well as new addresses started to rise on September 10 and were still increasing as of the time of this writing.

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