Chainlink is a decentralized Oracle network that acts as an intermediary between blockchain and external data.
What is Chainlink?
- Founded in 2017, Chainlink is a blockchain abstraction layer that enables universally connected smart contracts. Through a decentralized oracle network, Chainlink allows blockchains to securely interact with external data feeds, events and payment methods, providing the critical off-chain information needed by complex smart contracts to become the dominant form of digital agreement.
- The Chainlink Network is driven by a large open-source community of data providers, node operators, smart contract developers, researchers, security auditors and more. The company focuses on ensuring that decentralized participation is guaranteed for all node operators and users looking to contribute to the network.
- LINK token is a standard ERC-677 token used to pay fees for running a node in a smart contract. The node operators pull the off-chain data into the blockchain and charge fees from users. Chainlink has a reputation system allowing users to vote on the nodes that perform well to encourage service providers to maintain good service quality.
- Chainlink is secured by the proof-of-stake (PoS) consensus mechanism. Unlike the proof-of-work (PoW) consensus utilized by Bitocin, PoS relies on the amount of staked tokens for selecting node validators.
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Who is behind Chainlink?
SmartContract.com was founded in 2014 by Sergey Nazarov. It is an intermediary company providing external data to the blockchain which Oracle was formerly a centralized network for.
Later in 2017, the company was renamed to Chainlink and developed a decentralized Oracle network connecting with a smart contract platform to pull the external data into the blockchain.
What is the purpose of Chainlink?
The main mission of LINK is to provide reliable oracles to startups, enterprises, and other businesses. Because ChainLink uses a group of oracles, the information gathered is a lot more reliable than traditional contracts that rely on a single input.
- Chainlink provides a flexible structure for creating and running an Oracle network enabling users to create or connect to an Oracle network without relying on other networks.
- Chainlink can run on the existing blockchain without the dependency on other blockchains, which makes it possible to use the public blockchain, the company’s own blockchain and other blockchains as well.
- Chainlink uses external data from premium data providers allowing smart contracts to send orders to the nodes to prevent any form of failure.
- Since Chainlink is built on Ethereum, Chainlink will be directly affected if the Ethereum network crashes.
- The Oracle network is still limited to approximately 241 networks. The delays in data retrieval can sometimes occur, but Chainlink may consider adding more nodes to efficiently support the system in the future.
News and Updates:
- Chainlink Labs has collaborated with Hedra connecting the Oracle network with the Hedera network to generate digital assets called “Tokenization”.
- Binance Smart Chain will integrate Chainlink Data Oracle to enhance the ease of usage for payments and asset management, especially in DeFi where Binance smart chain cannot directly interact with the external sources. Although the system is more secure, it is still limited to the narrower users.
- Grayscale’s digital large cap fund has added Chainlink to the list of its holding digital assets by buying Chainlink with cash according to the criteria of the fund.
Community & Whitepaper Links:
All investment is speculative and involves substantial risk and uncertainty. Investors should understand the nature of digital assets including the terms of return and the risk of assets. We encourage investors to fully understand the assets and the risk associated with them prior to making any investment.
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