• Sat. Sep 30th, 2023



What is ChainLink (Link)?


Jan 13, 2023

What is ChainLink (Link)?

Chainlink was created by Sergey Nazarov and Steve Ellis. For the first time, the project became known in 2017, when Nazarov and Ellis released White Paper. Officially ChainLink launched in 2019. The basis of the project was the technology of decentralized oracles based on GCD.

It was developed jointly with the professor of Cornell University Ari Juels. Now he, together with the founders and other members of the team, works in Chainlink Labs, the main task of which is the development of the protocol and architecture of the project.

At the end of 2021, Chainlink Labs was an adviser to Google Executive Director Eric Schmidt.

What problem are the oracles solve?

Smart contracts are needed to work decentralized applications, however, some business models need data outside the blockchain. Delivery and verification of offchain-data for the execution of a smart contract was one of the main problems.

The oracles were originally responsible for this, but they were unreliable and centralized: the creator often controlled their work, and only one source of information used such a oracle. All this created the likelihood of a “refusal point” and was at risk of smart contract users.

Example – operations using instant loans. Data centralization-in this case, prices for crypto acts-led to the possibility of an exploit of a smart contract. Thanks to this, in 2020, the hacker stole from the BZX protocol, which used only one Kyber Network oracle, cryptocurrencies worth almost $ 1 million.

The creators of Chainlink improved the technology, presenting decentralized oracles. Their main feature is in the absence of a single data source and resistance to manipulation.

The smart contract connected to the ChainLink network requests information from several oracles at once to get as reliable data as possible. For this reason, the decentralized chancules Chainlink are also called consensus oracles.

How do Chainlink Oracles work?

Chainlink is a network of oracles, which unites many GCDs. The operator of one node can deploy several oracles. In turn, each oracle can have several sources of data.

Oracles use in their work the prices of data on prices (Chainlink Price Feed). They allow smart contracts for decentralized applications to receive quotes of various cryptocurrencies from centralized trading platforms. This is necessary, for example, when exchanging one crypto acting for another through a decentralized exchange.

What is ChainLink? All you need to know about the project

The above system for supplying data on crypto acts through oracles, the system of delivery of data on crypto -levels consists of three levels:

one. Famous aggregators – Coingecko, CoinmarketCap, Cryptocompare and others – receive data on bidding and prices directly from exchanges and other trading platforms.

2. These values ​​are transmitted to the Nodam Chainlink. They do not produce blocks, but process requests and control the operation of the oracles. Upon receipt of a request, an accidental group of suitable oracles responds to it. They receive requested data from relevant external sources and transmit them Chainlink.

ChainLink Nodes are divided into two types: Core – accept requests from users, and Adapter – act as a “bridge” between the node and the external source of data.

3. The data obtained by the oracles compares and compares the special CHINLINK AGGREGATING CONTRACT contract. When the nodes reach the consensus regarding the answer https://gagarin.news/news/the-metaverse-might-reach-5-trillion-by-2030/, a single value is transmitted to the addressee-the smart contract of the decentralized application, which sent the original request.

What data can be delivered by Chainlink oracles?

The technology of decentralized oracles is by no means suitable for cryptocurrencies and finance. For example, in the summer of 2021, Chainlink announced partnership with a popular weather forecast service – Accuweather. As part of cooperation, the platform supplies its data to decentralized oracle through Google Cloud.

This partnership, in turn, allowed Chainlink to attract another client. In the spring of 2022, the American Lemonade insurance platform, together with several blockchain projects, launched a new climatic risk insurance service for farmers. Instead of a regular policy, the Buyer of Insurance is a participant in a smart contract connected to the Chainlink oracle.

In April 2022, the Truflation Defi Firm used Chainlink oracles to create its own consumer prices in the USA (CPI). Unlike the official index, which is calculating the government, Truflation uses an alternative methodology of calculation, and Chainlink is responsible for the sources and reliability of the information.

What other services are there in Chainlink?

ChainLink oracles are able to perform different functions that have a wide range of application:

  • Checked random function (VRF). For each request, Chainlink VRF generates one or more random numbers and its cryptographic confirmation. VRF is used in application contracts where an accidental result is important based on a certain formula, in particular in blockchain games and NFT. The first game with the use of VRF was POOLTOGETER.
  • API integration-ChainLink provides smart contracts with the ability to connect to external data sources, including API.
  • Automation of the functions of smart contracts and their regular maintenance using “Guardians” (Chainlink Keepers).

Which blockchain works on Chainlink?

Chainlink does not have its own network. The project nodes work on the basis of blockchains, the applications of which they serve. Initially, Chainlink was launched on the basis of Ethereum. Now the project oracles are working in the SOLANA blockchain and networks compatible with the Ethereum virtual machine, including BNB Chain, Arbitrum, Optimism, Polygon, Avalanche and Fantom.

What companies and projects use Chainlink oracles?

According to the data of June 2022, the project ecosystem has more than 1300 projects.

ChainLink Oracles are used by the leading Defi Protokols: AAVE, AmpleForth, BZX, Celsius Network, Loopring, Polkadot, Synthetix, Lido and others.

In February 2022, Bank of America called the Chainlink project one of the main reasons for the growth of Defi. At that time, the project oracles were involved in Defi applications, the share of which in the total indicator of the TVL of the entire Defi sphere exceeded 59%.

“The adoption and growth of Defi [in 2021] were due to the ability of hybrid smart contracts [Chainlink], or self-filled and self-filled and protected digital agreements, to provide reliable and safe access to data from the real world, such as market prices, time. day, weather and coordinates of GPS, ”the bank reports.

Among the operators of the NODs Chainlink, the management of oracles, are many large enterprises: the Swiss telecom operator SWISSCOM, the German company Deutsche Telekom, as well as the Associated Press (AP) news agency.

What is ChainLink 2.0?

At the beginning of 2021, developers published White Paper called Chainlink 2.0. The authors of the document paid the main attention to the development of the so-called hybrid smart contracts, as well as new methods of using ChainLink oracles to obtain other capabilities on the network.

According to the co-founder of Chainlink Sergey Nazarov, the main characteristic of hybrid smart contracts is the unification of the code launched in the blockchain, with data and calculations outside.

Chainlink also plan to launch CCIP (Cross-Chain InteroperaBility Protocol)-a protocol of cross-compatibility, a global standard for interchange of messages and communication between blockchains. CCip seeks to complete the task that TCP/IP has completed for the Internet – to create a single “Internet blockchain”.

What is Link token for?

Link is a chainlink project to be in the Ethereum blockchain. Included in the top 50 cryptocurrencies by capitalization. Link emission is limited to 1 billion tokens.

Cryptoactive is necessary to pay for the work of oracles and is an economic incentive for NOD operators. Link is also used to increase the accuracy of data processing and support the stability of contracts on the network.

After the launch of Chainlink, he began to quickly gain popularity, and its tokens grow in price. Only in 2020, the cost of Link rose at once several hundred percent. Chainlink also has an active community – “Link Marines”, which actively promote the project on social networks.

At the same time, observers noted a high fraction of the concentration of Link: at the beginning of the spring of 2021, 81% of the entire emission was concentrated in 1% of holders.

In May 2021, the price of Link reached the peak after publishing White Paper 2.0, but then began to decline. As of the beginning of June 2022, the asset costs about $ 8.

In the second half of 2022, the project plans to launch Link Steering.

What incidents are related to the project?

In 2020, an information attack was made for the project. Unknowns published a fabricated report on behalf of the British Bank Zeus Capital on the fake website. In their work, anonymous authors claimed that the developers were selling large volumes of Link, and predicted the collapse of token prices. However, these accusations were not confirmed, and the cryptoactive only grew up in price.

In September of the same year, several NODs CHAINLINK made spam Atak: attackers sent mass requests for pricing data. CHAINLINK representatives said that the attack was insignificant and did not affect the work of the network and oracles. However, NOD operators spent a certain amount to pay for Ethereum commissions.

Leave a Reply

Your email address will not be published. Required fields are marked *