INSIDE CHAINLINK
Oracle’s decentralized and secure blockchain-based network
Chainlink (LINK) is one of the 20 cryptocurrencies available on the 2gether app that you can buy and sell with just one click at market price.
The fundamental question: What is Chainlink?
In order to continue delving into the world of blockchain, smart contracts and oracles, we have gathered the essential keys to understand one of the most relevant projects in the world of decentralized finance.
Origin
It was founded in 2014 by its current CEO Sergey Nazarov and the company’s CTO, Steve Ellis. In 2017 it gained the traction it needed by unveiling the Chainlink whitepaper, outlining a decentralized oracle protocol based on the Ethereum blockchain. And it was in 2019, that Chainlink’s core network was finally launched, forging it into one of the most important pillars of decentralized finance (DeFi) today.
What is Chainlink’s objective?
The blockchain oracle problem is one of the most important barriers to overcome for smart contracts on networks, such as Ethereum, to achieve mass adoption in a wide variety of markets and use cases.
Chainlink has developed a decentralised oracle network that can provide a multitude of guarantees that can be used in any combination.
Blockchains cannot extract or send data to any external system as a built-in functionality, as they are isolated networks, very similar to a computer without connection to the internet. The isolation of a blockchain is the exact property that makes it extremely secure and reliable. For smart contracts to realise more than 90% of their possible use cases, they must be connected to the outside world. Bridging the connection between the blockchain (on-chain) and the outside world (off-chain) requires an additional and separate piece of infrastructure known as an ‘oracle’.
If you want to learn more about oracles and what their main problem is, this Chainlink tutorial is key:
How does Chainlink work?
Chainlink (LINK) allows information to enter and leave a blockchain in a decentralized manner while maintaining security. It works with a network of nodes, called Chainlink Nodes (CN), which provides information to and from the blockchain using elements in the network tasked with ensuring that the information is correct and each node is analysed accurately and transparently.
The following Smart Content article explains everything you need to know about Chainlink and its network:
Token LINK:
So where do LINK tokens fit in?
LINK is an ERC-20 token built on Ethereum with an additional ERC223 “transfer and call” functionality. It allows tokens to be processed and received by smart contracts within a single transaction.
- Applicant contract holders use LINK to pay Chainlink node operators for their work. Prices are set by the Chainlink node operator based on the demand for the data they can provide and the current market for that data.
- Node operators must deposit LINK with Chainlink to demonstrate their commitment to the network and incentivize good service.
- Nodes with higher participation are more likely to be chosen to fulfil requests (and thus earn LINK tokens for their services). The Chainlink network also punishes faulty or dishonest nodes by penalising their participation on LINK for poor service.
