Hot : HashKey Exchange in Hong Kong has announced that it will begin trading ChainLink on November 10th. They have also enabled LINK deposits and withdrawals starting today.
ChainLink is a project that was initially introduced in September 2017 to address the "Oracle problem" in the Blockchain.
Smart contracts lack the ability to interact with any external data sources on the Blockchain. To expand the functionality of smart contracts, there's a need for a bridge that connects smart contracts with external data sources. However, these data sources cannot come from a centralized entity because if the data source connected to a smart contract is compromised, the smart contract itself would be compromised. This goes against the essence of Blockchain.
So, what is ChainLink, and how does it solve this problem? Let's explore this through this article:
1/ What is ChainLink (Link)?
ChainLink is a decentralized Oracle network that enables smart contracts to securely interact with real-world data and services outside the realm of Blockchain networks. With ChainLink, traditional systems that power modern economies can connect to the Blockchain industry to enhance security, efficiency, and transparency in various business and societal processes.
"Oracles" notify smart contracts of real-time data such as market prices, weather conditions, commodity locations, and more. Without Oracles providing this infrastructure, it's impossible for developers to build applications like DeFi and insurance on a Blockchain because they can't access data like prices and off-chain information.
2/ How does ChainLink work?
What makes ChainLink special is its ability to extract data from Oracles and bring it onto the Blockchain in a decentralized manner.
ChainLink's solution opens the door for smart contracts to autonomously handle insurance payments, financial contracts, legal documents, and various other applications in a decentralized and reliable way.
3/ A "network" within a "network" In the Blockchain ecosystem, a node refers to any computer device connected to the network. Nodes verify transactions, and ChainLink employs a set of independent "nodes" to collect data from Oracle sources.
For example, one node could connect to a national weather service, while another node connects to the NYSE.
ChainLink's network structure allows it to provide a diverse range of Oracle services uniformly. Unlike blockchains that operate as a single unified network with a consistent consensus mechanism, ChainLink Network is hierarchical and composed of multiple independent Oracle networks running the same software but operating independently from each other.
This design choice allows ChainLink to horizontally scale because any number of Oracle networks can operate in parallel without depending on any other Oracle network. Each Oracle network can independently determine:
4/ Who and how many independent Oracles participate?
Where Oracle source data comes from and what calculations Oracle networks perform. How data is secured and the frequency at which data is supplied on-chain. This flexibility allows ChainLink to offer a wide range of services and operate independently in any blockchain environment without complex interdependencies.
To prevent fraud, ChainLink uses multiple API sources and various nodes, then compares their results. Next, ChainLink automatically processes the data and sends requests to smart contracts. Smart contracts using ChainLink Oracles pay a fee in LINK tokens for the data.
To make fraud virtually impossible, ChainLink can require node operators to use LINK tokens as collateral. The penalty for providing bad data would make them abandon their intention.
5/ ChainLink's Onchain Architecture As an Oracle service, ChainLink Nodes respond to data query requests performed by or on behalf of user contracts (referred to as request contracts).
Behind the user interface, ChainLink consists of an on-chain component composed of three key contracts:
Reputation contract: Monitors the activity of Oracle service providers. Order-matchmaking contract: Executes proposed service level agreements (SLAs), records SLA parameters, and collects bids from Oracle service providers. It then selects bids using the reputation contract and completes Oracle SLAs. Aggregating contract: Collects responses from Oracle service providers and calculates the final aggregated result of a ChainLink query. It also feeds Oracle service provider metrics back to the reputation contract. The on-chain ChainLink workflow involves three steps:
Oracle selection; Data reporting; Result aggregation. ChainLink's Offchain Architecture ChainLink nodes are supported by an open-source, standard, off-chain core implementation (ChainLink Core) that handles standard blockchain interactions, scheduling, and connecting to shared off-chain resources.
Node operators can choose to add external software extensions called external adapters, which provide specialized off-chain services.
Adapters are external services. By modeling adapters as services, programs written in any programming language can be easily deployed by adding small intermediary APIs in front of them.
6/ ChainLink Security ChainLink takes several steps to ensure the integrity of its services.
Collateralized asset insurance: Smart contract owners can request a node to put up collateral assets (LINK tokens) to ensure they complete their tasks. If they fail to provide data, they lose the deposited funds to the smart contract owner.
Decentralized approach: To handle a single-source failure, ChainLink gathers data from multiple sources. It achieves this by using multiple nodes and data sources to serve smart contracts.
Trusted hardware: Reliable hardware designed to prevent tampering and protect against direct physical access is used to further decentralize ChainLink's approach.
To achieve a trustworthy execution, specialized hardware is required. ChainLink purchased a trusted hardware solution known as Town Crier, developed by Ari Juels, a computer science professor at Cornell University and a technical advisor to ChainLink.
7/ ChainLink Security Services These systems and services provide additional security to the ChainLink platform and its users.
Verification system: Monitors the behavior of Oracles on-chain, providing objective performance metrics to guide user choices.
Reputation system: Records and publishes user rankings of service providers and nodes, offering a means for users to evaluate Oracle performance. It includes a fundamental on-chain component where user rankings are available for other smart contracts to reference.
Certification service: Issues high-quality certifications of Oracle service providers.
Contract-upgrade service: A user-controlled option for handling faulty smart contracts.
Products Provided by ChainLink Market and Data feeds: Offer cryptocurrency market data, forex data, and off-chain data such as weather events, economic data, and commodity locations.
Verifiable Randomness: Generates an on-chain random source that users can independently verify, ensuring fairness, impartiality, and tamper resistance.
Keepers & Computer: Automates secure smart contracts for decentralized applications. ChainLink Keepers enable smart contracts to automate essential functions and event-driven tasks reliably, decentralized, and cost-efficiently.
Proof of Reverse: Provides on-chain reference data, allowing smart contracts to calculate collateral for any on-chain asset secured by an off-chain reserve.
Cross-Chain Bridging: Quickly builds secure cross-chain applications. The Cross-Chain Interaction Protocol (CCIP) provides a common standard open for developers to build secure services and applications that can send messages, transfer tokens, and initiate actions across multiple networks.
Enterprise Solutions: Seamless integration of ChainLink across all leading current and future blockchains, providing enterprises and governments a single integrated gateway to connect to any blockchain network.
8/ Basic Information About the
$LINK Token Ticker: LINK Contract: 0x514910771af9ca656af840dff83e8264ecf986ca Decimals: 18
Blockchain: Ethereum, BSC, Fantom, Solana, Avax... Token Standard: ERC-677
Token type: Utility Token Total Supply: 1,000,000,000
LINK Circulating Supply: 491,599,000
LINK Token Use Case As mentioned earlier, the
$LINK token is used to pay node operators in the ChainLink network, who are responsible for fetching and processing data off-chain to provide it on-chain.
Additionally,
$LINK can be staked in the recently launched ChainLink Staking program, adding an additional layer of security to the ChainLink economy, enhancing security, increasing node job reception, and earning additional revenue from various fees. This also allows the community to participate in the network and ensure the stable performance of Oracles.
9/ Token Sale
ChainLink raised $32 million through a token sale, including a presale and an initial coin offering (ICO) conducted in September 2017. The total number of tokens sold at that time was 350 million LINK, which was approximately 35% of the total supply.
Presale Price: 0.0003 ETH (~$0.09) for 1 LINK. A total of $29 million was raised during this round.
ICO Price: ~$0.11 for 1 LINK. The remaining $3 million was raised during this round.
10/ Token Allocation
35% was sold during the token sale fundraising round. 35% is allocated to Node Operator Incentives.
30% is held by the ChainLink Team.
Storage Wallets & LINK Exchanges LINK can be stored in wallets like Trust Wallet, Metamask, Coin98, Math Wallet, Im token, as well as hardware wallets like Ledger Nano S and Trezor.
11/ LINK Exchange Platforms
Currently, LINK is listed on various large and small exchange platforms. This allows users to easily purchase LINK on exchanges such as Binance, Coinbase, Digifinex, Huobi, Poloniex, and Kraken. Among these, LINK is currently traded the most on the Binance exchange.
12/ Roadmap
Chainlink does not have a specific roadmap. However, in the most recent SmartCon event in September 2022, Chainlink's founder, Sergey Nazarov, announced the launch of Super Linear Staking in December (which has already been launched) and CCIP in 2023.
13/ Project Team, Advisors, Investors & Partners Project Team
Chainlink was launched at the end of 2017 by the technology company SmartContract in San Francisco, led by CEO Sergey Nazarov and CTO Steve Ellis.
Sergey Nazarov: Founder of Smart Contract, Secure Asset Exchange (SAE), and CryptoMail – a decentralized email service, General Partner at QED Capital. Steve Ellis: Software engineer at Pivotal Labs; Co-Founder and CTO of Secure Asset Exchange; Teacher's Assistant at New York University in the Computer Science department. Currently, the Chainlink team is reported to have more than 400 members worldwide.
14/ Advisors Ari Juels:
Professor of Computer Science at Cornell Tech's Jacobs Institute and Co-Director of IC3 (Initiative for Cryptocurrencies and Contracts). He previously served as Chief Scientist at RSA. Eric Schmidt: Former CEO of Google, where he helped grow the startup into one of the world's most significant technology companies. Eric has also been on the boards of Alphabet, Apple, Princeton University, Carnegie Mellon University, and the Mayo Clinic. Andrew Miller: A prominent leader in decentralized consensus research and secure blockchain infrastructure. He is an assistant professor of computer science at the University of Illinois and serves as an advisor for Zcash and Tezos. Tom Gonser: Founder of DocuSign, a leading electronic signature company that revolutionized digital contracts. He is a successful entrepreneur, CEO, and experienced board member who has created billion-dollar enterprise value. Dan Boneh: Dan is a professor at Stanford University and heads the Applied Cryptography Group. He has an h-index of 123 with over 100 publications and more than 87,000 citations. Dan's research focus includes new cryptography systems, cryptographic analysis, and web security. Christian Catalini: Christian is the co-founder of Diem and the Chief Economist of the Diem Association. He founded MIT's Cryptoeconomics Lab and frequently presents his work at top organizations such as the Federal Reserve, World Economic Forum, and International Monetary Fund. Jeff Weiner: Jeff built LinkedIn into the world's largest professional network and currently serves as its CEO. He specializes in developing technology companies and advises top tech leaders, serving on several advisory boards, including Intuit and DonorsChoose. Balaji Srinivasan: Balaji was previously the CTO of Coinbase and is a general partner at Andreessen Horowitz, where he helped the venture capital firm venture into the blockchain industry. Balaji is also the co-founder and board member of Coin Center, a leading blockchain advocacy organization. Lynda Smith: Lynda is the former CMO of Twilio and helped build it into the world's leading cloud communications platform. She is currently a lecturer at Stanford University and has led marketing initiatives at top tech companies like Nuance and Genpact. 15/ Investors & Partners Investors In 2017, Chainlink (LINK) raised a total of $32 million through three rounds of funding from investors including FJ Syndicates, Richard F. Dulude, Nirvana Capital, Limitless Crypto Investments, George Burke, Andreas Schwartz, Fundamental Labs, 8Decimal, Anmi OECD, Consensus Capital, Framework Ventures, and Outlier Ventures.
16/ Partners Some of the major partners of ChainLink (LINK) include:
SWIFT: A massive interbank communication network. Zeppelin OS: An operating system developed specifically for creating smart contracts. Request Network: A platform for exchanging to become the standard for fiat and cryptocurrency exchange. Signal Capital: A London-based private asset management company. IC3: A group of security researchers and computer science academics focused on advanced security research. Gartner: An independent research company providing smart contracts. Google: A leading multinational technology company. Additionally, over 1500 cryptocurrency projects have used Chainlink's services.
17/ Thoughts on LINK
#Lion believes that Chainlink is a project that should be in the long-term investment portfolio of investors. The importance of Oracles in the blockchain space cannot be understated, as without Oracles, blockchains would be like computers without internet access. Currently, Chainlink dominates the Oracle space, holding a significant share and continuing to develop rapidly, even during downtrends. They consistently integrate with various blockchains and introduce new products like Staking and CCIP.
Furthermore, Chainlink has a team of over 400 individuals and a high-quality group of advisors working tirelessly to bring success to Chainlink and the broader crypto market.
Chainlink faces competition in the Oracle space, such as Band Protocol, API3, DIA, but the significant difference can be observed when comparing market capitalization and the number of partners utilizing Chainlink's services.
However, there is still a holding position risk. In 2021, the Chainlink team continually released LINK tokens into the market, resulting in a lower ROI compared to Layer 1 projects. This has also impacted Chainlink's short-term price.
18/ Frequently Asked Questions About LINK
What is an Oracle? An Oracle is any system that serves a smart contract by providing off-chain data or connecting smart contracts to off-chain systems. In simple terms, an Oracle allows blockchains to interact with real-world data through APIs and data sources.
For example, a smart contract may require an Oracle to obtain the real-time trading price of a token to determine whether a loan in that smart contract has been liquidated or not.
19/ What can you do when holding LINK?
Similar to any other token in the market, LINK holders can take their holdings to exchange platforms to trade and profit from price differentials. Additionally, users can stake LINK to secure the Oracle network, although the APR (Annual Percentage Rate) for staking is relatively low (5%). Future Chainlink updates are expected to reveal more use cases for the token.
20/Conclusion
#Lion has provided answers to the question "What is Chainlink?" and shared information about the
$LINK token. It's essential for investors to conduct their research and evaluation to make informed investment decisions. Best of luck to everyone! Please don't forget to like, share, and comment to support
#Lion. Thank you, everyone! Love all.