ChainLink (LINK) is attempting to revolutionize the blockchain oracle space. Providing DApp developers and smart contract users the chance to use verified decentralized data sources, connecting to “real world data, events, and payments.”
But why is ChainLink causing such a storm in the blockchain oracle world?
What Is ChainLink?
First, you need to know what a blockchain oracle is. Read the first paragraph of the linked article, and then come back. Want the TL;DR? A blockchain oracle bridges the gap between a smart contract and external data sources.
ChainLink is a decentralized blockchain oracle network. The ChainLink network token is LINK, and the oracle network is built on the Ethereum blockchain. ChainLink raised $32 million in an ICO back in September 2017 and launched its mainnet in June 2019.
“The ChainLink network provides reliable tamper-proof inputs and outputs for complex smart contracts on any blockchain.”
ChainLink is developed by SmartContract, a company founded in 2014. CEO Sergey Nazarov is an entrepreneur with previous in the cryptocurrency world, including Secure Asset Exchange and Crypto Mail.
How Does ChainLink Work?
The ChainLink network comprises thousands of ChainLink nodes. Each ChainLink node sells the use of a specific data feed, an API, or an external data source. Importantly, ChainLink authenticates the data its oracles provide before it is used as a smart contract trigger.
ChainLink has two major network components: on-chain infrastructure and off-chain infrastructure. They work together to provide smart contracts with the data they require, performing different roles in the ChainLink network.
ChainLink On-Chain Infrastructure
The on-chain network deals with data requests and queries. Once the network receives a data request, the ChainLink network turns this into an internal network contract. The contracts are responsible for linking the requesting contract with an appropriate oracle. The ChainLink contract component consists of three individual contracts:
- First, the Reputation Contract checks oracle providers network metrics to verify its suitability.
- Next, the Order Matching Contract logs the service level agreement of the user contract, which allows it to begin collecting bids from oracle providers that passed the Reputation Contract metric check.
- Finally, the Aggregating Contract collects the data responses from the oracle providers, calculates a final collective value, and delivers that result to the smart contract.
These three contracts form part of the wider on-chain workflow. The ChainLink on-chain workflow has three steps:
- Oracle Selection. The person requesting an oracle service specifies their requirements, creating a service level agreement (SLA) in the process. The SLA contains the details of the search, the parameters, and how many oracles are required. Also included in the SLA is the reputation contract level and the aggregation contract used to deliver the results. Once the selections are complete, the SLA is submitted to the Order Matching Contract. The submission triggers the ChainLink nodes to choose whether to bid on the SLA or not. After the bidding process completes, the chosen oracles are recorded in the SLA, which in turn triggers the oracles to search for and return the data required.
- Data Reporting. Once the oracle record is created, the off-chain oracles execute the agreement. Basically, the requirements of the SLA are taken care of. The results of the SLA are returned to the blockchain for on-chain nodes to process.
- Result Aggregation. The results return to the Aggregating Contract, which tallies and validates the information. Once all the oracles return their data, a weighted answer is produced.
ChainLink Off-Chain Infrastructure
ChainLink’s off-chain infrastructure comprises oracle nodes connected to the Ethereum blockchain. At the time of writing, ChainLink only communicates with Ethereum blockchain-based smart contracts. However, that status will change in the future.
The off-chain nodes take responsibility for collecting external data. Nodes harvest data individually but present the data for aggregation before relaying it to the user data request and SLA. A node operator must use the standard open source ChainLink Core software but can use External Adapters to modify the node to allow specialized services.
ChainLink Is a Decentralized Oracle
Blockchain oracles are still a new blockchain technology, even within the relative youth of the entire blockchain and cryptocurrency industry. Early on, blockchain oracles were centralized. That creates problems for tokens and platforms aiming for decentralization and trustless operation.
ChainLink sets itself apart from most other blockchain oracles using distributed sources and oracles. ChainLink users have the option to choose from a wide range of oracles which in turn cover a variety of incoming data sources. When the user contract arrives with the ChainLink network, it is offered to multiple off-chain nodes, too. Furthermore, the data and reputation reporting ensures that oracles remain honest, dedicated to providing the most accurate information.
How Do You Buy LINK?
The ChainLink network token is LINK. LINK is an ERC-20 token, with a maximum supply of 1 billion tokens. You cannot mine LINK. However, data source owners can earn LINK for their contributions to the network.
At the time of writing, one LINK token costs $3.41. LINK’s all-time high is $4.05, achieved in June 2019. It has a market capitalization of $1,193,226,267, ranking it the 17th cryptocurrency by market cap.
Coincodex lists 25 exchanges trading LINK, with 54-coin pairings.
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The Future of ChainLink and LINK
ChainLink solves one of the biggest issues facing blockchain oracles: trust. How can you trust a single data source in a trustless environment? By making the blockchain oracle decentralized and trustless, too.
ChainLink has a strong development team and has also made some strategic acquisitions and partnerships to strengthen its position. For instance, ChainLink acquired Town Crier, a Cornell University project that ensures data privacy and security for smart contracts that uses encryption to verify and process transactions.
Ari Jules, co-author of the ChainLink whitepaper [PDF], believes that the “Integration of Town Crier into the ChainLink platform will help solve the vital problem of smart contract connectivity by bolstering both data integrity and query confidentiality.” The development of Town Crier continues under the guidance of ChainLink.
Further to the Town Crier acquisition, Google announced that it would offer a ChainLink integration for Ethereum DApp builders using its public blockchain data service. The integration with ChainLink is another strong indicator of the trust and direction of the decentralized blockchain oracle service.
ChainLink will continue evolving, leading the way in the decentralized blockchain oracle space.
Join the ChainLink Community
ChainLink has seen some phenomenal growth since its 2017 ICO. Accordingly, it has a large and passionate group of communities.
- Official ChainLink Twitter
- Official SmartContract Twitter
- SmartContract CEO Sergey Nazarov Official Twitter
- ChainLink subreddit
- ChainLink LinkedIn
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