Chainlink (LINK) is a platform that provides a bridge between non-blockchain enterprises and blockchain networks. It has the capability of connecting smart contracts to external data sources, like sports scores or stock market values. The LINK token is utilized to pay Chainlink network operators and also secures the agreements made through the smart contracts.
Chainlink is a blockchain abstraction layer or decentralized oracle network that allows for the safe utilization of blockchain technology to carry out computations both on and off-chain. This is referred to as “hybrid smart contracts” and it enables companies to access major blockchain networks, such as Ethereum and Solana.
Based on the proof-of-stake protocol, Chainlink is a blockchain technology hosted on the Ethereum platform. Furthermore, it is an open-source venture, allowing anyone to review the code and make contributions.
The Chainlink distributed ledger is able to facilitate the protected transmission of data, outputs, and calculations. Chainlink offers the following features:
- Encouraging distributed data: Securely gather and process information from multiple sources for hybrid smart contracts.
- Securing randomness: Utilize Chainlink for applications like games that require cryptographic randomness to ensure sources are verified.
- Facilitating automation: Employ Chainlink smart contracts to automate essential functions and event-driven tasks for organizations.
- Fostering blockchain interoperability: Chainlink can bridge blockchain platforms to enable the exchange of messages, tokens, and certain activities.
Chainlink: Background and Its History
Launched in 2017, Chainlink is a blockchain-based decentralized oracle network that operates to bridge blockchains with external systems. This allows smart contracts to be executed based on input and output data from the blockchain.
By diverging from the centralized model of traditional oracles, Chainlink makes it possible to move data between blockchains and other external systems via “hybrid smart contracts.” Operators of the Chainlink network are rewarded with LINK tokens for the actions they take to acquire data from external sources, format it into a readable condition, and execute off-chain computations.
The Chainlink oracle network is a structure of nodes that practice predetermined protocols. Node owners must pledge a certain amount of their LINK tokens. The node managers decide on their own fees based on the necessity for the resource they offer from outside the blockchain.
The Chainlink oracle network is advantageous because it can securely send data between blockchains and off-chain systems. It has been used for a number of purposes, such as fairly distributing non-fungible tokens (NFTs), adding a gaming element to personal savings, and allowing for adjustment of cryptocurrency token supplies.
Sergey Nazarov and Steve Ellis, along with Ari Juels, are the authors of the 2017 white paper that was the basis of Chainlink’s creation. The network was officially released in 2019. LINK is an ERC-20 token and thus is able to work with Ethereum-supported smart contracts and other currencies.
Chainlink v.s. Ethereum
The Chainlink network actually works in tandem with the Ethereum network and other blockchains by allowing secure connections between Ethereum projects and off-chain data. The LINK token, which is constructed on the Ethereum platform, adheres to the Ethereum platform’s protocols.
One can employ Ethereum tokens for a variety of purposes, such as making purchases, executing smart contracts and compensating miners for running the Ethereum network. On the other hand, Chainlink tokens are only useful for one purpose, which is to pay node operators in the Chainlink network.
Chainlink: What’s The Use And Purpose Of It?
The objective of Chainlink is to provide a secure and reliable connection between smart contracts and real-world data. It is designed to enable the transfer of information from off-chain sources to smart contracts in a secure and reliable manner. The platform also facilitates the transfer of payments between smart contracts and external payment networks. Finally, Chainlink provides an automated system for managing and verifying data sources, allowing developers to create and deploy smart contracts with confidence.
Chainlink is aiming to further its growth by advancing its compatibility with different blockchain environments and making new applications for hybrid smart contracts available. Since a lot of data and documents are not currently stored on blockchains, Chainlink has numerous chances to link blockchain networks with off-chain information.
In 2021, the Chainlink network experienced a tremendous surge in its value to the tune of over $75 billion, and had expanded to encompass more than 1,000 projects. The total issuance of its tokens is capped at 1 billion, and roughly 491 million of them had been released by September 2022.
Some Other Common FAQs
What can I buy with LINK?
As an incentive, Chainlink node operators are rewarded with LINK cryptocurrency rather than for everyday purchases. These participants in the network are responsible for securely delivering data to and from blockchains and are compensated with LINK.
What makes Chainlink popular?
Chainlink’s decentralized oracle has made it possible to connect a wide array of data to various blockchains, thereby creating a plethora of prospective uses. This technology, if utilized, could assist in bridging the gap between blockchain technology and many industries, as well as business operations.
Is Oracle the Creator of Chainlink?
Oracle Corporation (ORCL), a computer technology firm with a focus on database management, has nothing to do with Chainlink. Chainlink defines itself as a decentralized oracle network, wherein the “oracle” is an expansive array of intermediaries that link blockchains to external information systems.
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