Threshold Signatures for Dummies

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 a decentralized oracle network that eliminates any single point of failure in a smart contract by utilizing multiple oracles. For a more in-depth look on how the network works, check out my other article: “An In-Depth Look at the LINK Token”.

Chainlink published a blog post several months ago detailing how threshold signatures can scale Chainlink’s security independently of Ethereum’s throughput. In this article, I will try to make it easier…