Chainlink is a decentralized network of nodes that uses oracles to connect on-blockchain smart contracts with data and information from off-blockchain sources. Reliability problems that could arise when using only a single centralized source are eliminated by this process and additional security hardware.
In this article, we’re going to explain what chainlink is and who created it, chainlink’s architecture, what is link, where to buy it, and what my thoughts are on it.
What exactly is chainlink? (LINK)
Chain link is a decentralized blockchain platform based on Ethereum’s network. It seeks to address the issue of connecting smart contracts to the real world. Since the introduction of blockchain technology, several applications have been explored ranging from decentralized apps to monetary transactions and even voting systems. However, a major worry with blockchains is that each blockchain is a world unto itself fully isolated from the rest of the world.
Chain link comes into play here chain link uses its unique network of nodes to provide a secure trustworthy and decentralized method of transferring information into and out of a blockchain. Chain link makes use of oracles that take data from the real world and transform it so that it can be used on a blockchain.
Who created chainlink?
Smart contract limited is chain link’s parent company, its headquarters are in San Francisco and the company is run by CEO Sergey Nazarov and CTO Steve Ellis.
Sergey Nazarov is a well-known player in the blockchain sector having founded multiple additional companies such as secure asset exchange and crypto mill. Before co-founding smart contacts limited Steve Ellis worked as a software engineer at pivotal labs and secure asset exchange. Chain link was launched in June 2017 and its white paper was published in September of that year. In under two hours, 32 million dollars was raised in an initial coin offering. However, there was some controversy because 90 of the tokens were previously purchased during the pre-sale, leaving only 10 for the actual public sale. On average one link was sold for 11 cents.
How does chainlink works?
Chain link’s process may be broken into three simple yet distinct stages oracle selection, data reporting and result aggregation are among these processes. The first stage in oracle selection is for users to develop a service level agreement often known as an SLA. The SLA essentially outlines the data that is expected from the outside world. Chain link then validates the SLA criteria and links them with oracles that can deliver the necessary data. Finally, the user can submit their SLA and deposit link currency to initiate an order matching contract. Oracles can then bid on the order matching contract. Oracles link with external sources to retrieve real-world data at the data reporting stage. This data is the same as what the user requested in the SLA. The data is subsequently analyzed by the oracles before being returned to the chain link network.
All of the data collected and processed by the oracles are tallied and submitted to an aggregation contract in the last stage, fittingly termed result aggregation. The aggregation contract evaluates all data assessing its validity and accuracy and determining whether it corresponds to the data required by the user in the SLA. Finally, it displays to the user a weighted score calculated from the sum of all data gathered.
Chainlink is a blockchain that is primarily powered by three types of smart contracts, these smart contracts are responsible for chainlink’s functionality. These three smart contracts are called aggregation contracts, order matching contracts, and reputation contracts.
As I previously stated the aggregation contract collects the data supplied by the oracles and verifies and validates its legitimacy. In order to send the most accurate data to the smart contracts that require it. As the name implies order matching contracts match the data required by the SLA with the best bidding oracles resulting in a win-win situation.
Finally, the reputation contract is in charge of determining an oracle’s overall integrity and authenticity. It accomplishes its goal by examining the oracle’s track record. The reputation contract examines the total number of requests permitted by the oracle, as well as its average response time and the amount of LINK pledged.
What is LINK?
The chain link blockchain’s native coin is LINK. Its primary purpose is to transmit value across the blockchain. This also means that the node operators who run the entire network are compensated in LINK. Furthermore, whenever a user requires data from the outside world they must submit a service level agreement or SLA along with some link, in order to begin the process of locating an acceptable oracle.
As a result, if a corporation wishes to run a smart contract that has been augmented with a chain link node it must do it using link currency. Link is an erc20 token that also has the erc223 transfer and call capability. This basically means that a link can be processed and received by a smart contract in a single transaction.
The link token was first introduced in 2017. Its price of the time was just 20 cents but its growth has been, to put it mildly meteoric. Its price remained stable at around one dollar in 2019 while it rose from two dollars at the beginning of 2020 to an all-time high of around 36 in February of 2021.
Where can you buy LINK?
You can buy LINK on almost all exchanges like Binance, Okex, and Kucoin in the same way that you would buy any other cryptocurrency. You have the option of placing a market buy or a limit buy. Select the price you’re willing to pay with the limit purchase and your order is filled once the token price hits your limit price. If you need the token urgently however you can place a market order, in which you agree to pay the current price and have your order filled almost instantly. If you want to buy LINK you can do so by going to Binance or Okex.
Chainlink like all platforms developed on the Ethereum network may be limited by Ethereum’s constraints. Congestion on the network might have a negative impact on-chain link’s operation. Another source of concern is that the parent corporation retains control of 60% of LINK making it a highly centralized operation. Chain link’s low number of oracles in its oracle network has been a long source of concern. The network currently has 250 active oracles. If chain link is to fulfill its mission this figure must dramatically climb.
Finally, a fundamental problem with chain LINK is that it cannot reliably check the information provided to the user. This means that chain link relies on centralized verification and dispute resolution but lacks a trust-free method of determining whether or not the information or data provided is accurate. I hope you have a better understanding now of what chain link is so what are your thoughts on chain link and smart contracts?