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There’s been a lot of talk surrounding the capabilities and functionality of Chainlink lately. This revolutionary protocol seeks to eliminate many of the most common issues encountered by oracles today. Consequently, Chainlink has the potential to revolutionize the sector.
What are Oracles?
Oracles are third-party sensors that can trigger smart contracts. Importantly, these sensors do not live on the blockchain. Instead, they function as intermediaries. Specifically, oracles translate off-chain data to smart contracts on the blockchain and back again.
For example, imagine a sports betting platform that could pay out winners via a smart contract automatically. Notably, oracles can be set to monitor anything. To date, oracles have been set up to run off the weather, stocks, and currency values. The possibilities are endless, but the technology is still in its infancy.
Problems with Oracles
While there are many uses for oracles in the market, their adoption has been slow due to technical limitations. Primarily, oracles are a centralized form of data. This centralization means that incorrect information could be sent from an oracle to the blockchain. When the wrong data is sent, it creates issues within the blockchain ecosystem. Blockchain experts refer to this quagmire as the “Oracle Problem.”
How Chainlink solves these Problems
Chainlink attempts to tackle these concerns in a variety of unique. Primarily, decentralization helps to create more inputs and redundancy within these networks. Additionally, the platform introduces some unique protocols to accomplish this task.
The process begins when a smart contract puts out a Requesting Contract for information. This request then registers as an event within the blockchain. Then, the system creates a Chainlink Service Level Agreement (SLA) Contract. This contract initiates three other contracts within its structure.
Chainlink Reputation Contract
The first contract is the Chainlink Reputation Contract. This protocol verifies an oracle’s authenticity and history. This data provides the network with a rank based on the oracle’s accuracy.
Chainlink Order-Matching Contract
The second contract delivers the Requesting Contract to the Chainlink nodes. Next, the nodes will bid on the request. The system automatically selects the right number of nodes to use. Additionally, it knows the type of nodes needed to fulfill the request.
Chainlink Aggregating Contract
The final contract compares all the approved data. It will validate the information and make decisions on final approval. The system reconciles incorrect data in this stage as well.
The Chainlink system can determine, with accuracy, if a single node within the network fails. It can do this by comparing the other components of the network and the oracle’s past performance. Faulty nodes are removed from the network immediately.
LINK is the utility token that services the Chainlink network. This token serves many purposes. Users can use LINK to pay for services on the network and initiate smart contracts. There is currently 350,000,000 LINK in circulation. In total, Chainlink will issue 1,000,000,000 LINK.
History of Chainlink
The Chainlink journey begins way back in 2014. It was at this time that SmartContract.com officially started the Chainlink platform. The goal of Chainlink was to help bridge the growing gap between external data sources and public blockchains.
In 2017, Chainlink hosted an ICO. The event received heavy media coverage. The platform secured $32 million to further the development of its decentralized oracle network.
In 2019, Chainlink inked a strategic partnership with Google. The partnership secured Chainlink’s protocol within the Google smart contract strategy. Specifically, the partnership allowed users to connect to Google’s most popular cloud services, BigQuery, via API.
Users can now use Chainlink to introduce data from BigQuery crypto public datasets on-chain. This enables developers to create entirely new functionalities within the Ethereum space. It also reduces inefficiencies found in the current business model.
Anyone Can Link
Keeping in line with the decentralized sector’s openness, Chainlink invites anyone who has a data feed or API to join the network. Best of all, you receive LINK payment for the data your oracle retrieves and shares to the network.
It’s Time to LINK Up
Chainlink is miles ahead of the curve with its next-generation platform. Oracles are one of the fastest-growing research areas within the blockchain sector. You can expect to hear a lot more from this group as their network expands in the coming months.