An In-Depth Look at the LINK Token

In this article I will go in-depth on the staking mechanism of the Chainlink network and why the LINK token is needed.

Note: If you’re not familiar with Chainlink, make sure to go through my previous article first: “Chainlink: A Fundamental Analysis”.

Before we start, here are some key terms to know:

• Blockchains are essentially very secure, distributed, and decentralized databases.
• Smart contracts are lines of code that automatically execute a function when given an input — just like a vending machine.
• Chainlink is a form of digital infrastructure that secures data transmission.

Smart contracts, such as high-value smart derivatives, need real-world data from off-chain sources in order to execute. They need a software called an oracle to fetch said data, parse it, and feed it to contracts on the blockchain. All oracles are currently centralized, thereby negating all the advantages that come from using a decentralized blockchain. Chainlink is the most decentralized oracle project at the moment, more on why this is can be seen in my other article: “Decentralized Oracle Networks”. The LINK token is ERC-677, giving it the transfer and call functionality which lets the token trigger a contract to behave in a certain way. This was made specifically for Chainlink…