Chainlink is a blockchain platform founded in 2017 by Steve Ellis and Sergei Navarov from smartcontract.com. It acts as a bridge between the blockchain industry and the traditional administrative world, connecting the blockchain to the real world. Chainlink was designed to solve the problem of taking off-chain data like weather, stock prices, and social media engagement, and moving it on-chain to make it readable for smart contracts.
Chainlink uses a token called LINK, which is used to fund the growth of the project. It has a maximum supply of 1 billion tokens, with currently around 450 million tokens in circulation. The LINK token has two main use cases: paying the network to provide data and being staked by oracles to ensure they provide truthful data.
Smart contracts are like regular contracts but elevated for Web 3.0, usually written in code and stored on a blockchain. Smart contracts can automate the process of verifying an agreement between parties. However, smart contracts are limited by the blockchain’s capability to only look at past data, such as account balances and transaction history.
Chainlink aims to create a network where data providers, known as oracles, can be incentivized to provide truthful data to a blockchain. Chainlink is a decentralized network of oracles that provides data from the off-chain world and brings it on-chain in a secure and reliable way. Oracles act as middlemen between real-world data and smart contracts. Chainlink replaces middlemen by using trustworthy people to gather data off-chain and bring it on-chain. To become an oracle, you must lock up some of your LINK and say, “I want to be a trusted source of data!” If for some reason an oracle is untruthful, their money can be taken.
When someone wants a piece of data that isn’t already on-chain, like a game score, weather, or price, they create something called a requesting contract. The Chainlink protocol registers this request as an event and sets up a reputation contract that evaluates an oracle’s track record and removes anyone deemed unreliable. It then creates an order-matching contract that assigns potential oracles to handle the request and finally sets up an aggregating contract that determines which data set is correct.
In summary, Chainlink is a blockchain platform that solves the problem of connecting off-chain data to smart contracts in a secure and reliable way. The use of oracles incentivized by the LINK token ensures the accuracy of the data provided.
