By Damian David Mar 14, 2023
Chainlink is a unique decentralized computing network tagged an "oracle network" made with hybrid smart contracts that helps traditional smart contracts interact with data outside of the blockchain network they're built on.
Chainlink was created by Sergey Nazarov and Steve Ellis and co-authored by Dr. Ari Juels, a professor from Cornell University in 2017 and then subsequently launched in 2019 to serve as a smart contract enhancer.
● Chainlink works by making smart contracts able to accept information that was not pre-installed in it, especially information outside the blockchain network.
● Chainlink connects or links blockchain structures with real-life data and events enabling them to assimilate and work with these data.
● Chainlink is decentralized and hence functions with deFi protocols and mechanisms but with the ability to serve as an intermediary between blockchain and non-blockchain projects.
● Chainlink has a native token tagged "LINK" chiefly used as an incentivizing token for node operators on the network.
● Chainlink can be used to effectively generate randomness or random outcomes. For example, games or any technology that will need to pick an outcome based on randomness will find Chainlink very useful.
● Chainlink was launched in 2019, two years after it was proposed and created by Sergey Nazarov and Steve Ellis.
● There are currently 77+ practical smart contract use cases of the Chainlink decentralized oracle network.
Chainlink is tagged a "Decentralized Oracle Network (DON)". It was described as a Decentralized Oracle Network (DON) because it was created to innovate the functions of smart contracts by extending their potential or capacity to carry out functions that were not pre-installed in it or functions that were not initially available.
Smart contracts are called smart contracts because specific functions were programmed and made to run or execute once all required standards are met. So this makes the concept of smart contracts rigid or unalterable, subsequently making its functions strictly dependent on the environment it was programmed.
Chainlink solves this issue by being an "Oracle '' to traditional smart contracts in the sense that it modifies them to execute functions that were not initially programmed in them. Since Chainlink is a blockchain network and also a decentralized one, it also makes use of smart contracts, but a unique type of smart contract called "Hybrid Smart Contracts" or "Hybrid Contracts".
Hybrid Smart Contracts are a type of Smart Contract the Chainlink blockchain network uses, as the name implies it is made up of two layers namely; On-Chain Layer and Off-Chain Layer. So basically the goal of Chainlink as a Decentralized Oracle Network is to merge off-chain services and products to on-chain functionalities, the two layers ultimately make up a Hybrid Contract.
Taking into consideration the goal of Chainlink, it's evident that a lot of blockchain networks or protocols will eventually make use of Chainlink as a service. This will ultimately make Chainlink non-homogeneous, and also grow into an ecosystem of Decentralized Oracle Networks (DONs) inadvertently making it not just one Decentralized Oracle Network but a computing ecosystem where Decentralized Oracle Networks run in parallel.
Decentralized Price Feeds: With the Chainlink decentralized oracle network, accurate and real-time financial data from outside the blockchain network regardless of its market can be provided by smart contracts to their users. For example, Aave uses Chainlink Data Feeds to provide real-time prices and also determine risk parameters for assets in multiple blockchains.
A Verifiable Random Function (VRF): As mentioned earlier in this article, Chainlink can be used to generate random outcomes and this feature is particularly used by gaming and NFT applications or networks. With Chainlink's VRF ( Verifiable Random Function), smart contracts, blockchain, and non-blockchain applications can provide random event generator services for their users.
Proof of Reserve (PoR): With the Chainlink decentralized oracle network, smart contracts determine the accuracy or confirm the proof of on-chain assets and projects that have off-chain backups of any kind. This is possible because Chainlink uses a hybrid smart contract already explained above.
Automation: Chainlink isn't just a catalyst or facilitator, it executes a command all through. Being that it links on-chain and off-chain networks, data exchange and the transaction that follows therein still needs to be executed and Chainlink doesn't leave this process to the on-chain networks as it is automated to see the execution through to the end.
Cross-Chain Interoperability Protocol (CCIP): With Chainlink Decentralized Oracle Network, the transfer of data between different blockchains is carried out seamlessly and efficiently. It aids cross-chain interoperability as it is a multi-compatible blockchain.
Modular External Adapters: Chainlink serves as the gateway connecting on-chain networks to off-chain resources. This makes it function as an external adapter that can be used to connect to an off-chain information source regardless of their nature and also subsequently facilitate the transmission of this information to the on-chain receiver or network.
LINK is an Ethereum standard native token of the Chainlink Decentralized Oracle Network (DON) that is chiefly used as an incentivizing tool to reward node operators on the Chainlink network, ultimately ensuring the smooth running of the network.
According to CoinMarketCap as of March 2023, LINK is valued at $6.60 per token with a market cap of $3,404,427,523. There is a total supply of 1,000,000,000 LINK tokens and a total of 517,099,970 LINK tokens in circulation.
Sergey Nazarov is a co-founder, co-author, and present chief executive officer (CEO) at Chainlink Labs.
If you're a developer with projects running on Blockchain technology, the Chainlink Decentralized Oracle Network (DON) is one of the products you will find very useful because Chainlink provides the edge anyone needs in the Blockchain Industry.
Chainlink makes Blockchain services more flexible and decentralized indeed as it doesn't only work with information in the Blockchain Industry, but extends its resources to those outside the Blockchain Industry through Smart Contracts that are modified to be hybrid in nature.
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