A complete guide to Chainlink, a platform designed to connect smart contract technology to the real world, and its $ LINK token.
Founded in 2013 in the Cayman Islands by Sergei Nazarov and Steve Ellis, chainlink was created in conjunction with SmartContract as a DeFi mainstream blockchain institution to serve as an intermediary for connecting conventional data sources and blockchain technology methods.
In the world of cryptocurrencies, this institution is growing at an ever faster pace, its current total value is approximately $ 6 billion, and the value of one market token in the stock market is $ 17.
Chainlink is a decentralized network of data sources, having both an intra-chain system for external parties to connect to the data approximation network and an autonomous system for consensus mechanisms.
On-Chain network
This Chainlink system is divided into three main components:
- Reputation Contract − Responsible for monitoring oracle service performance metrics.
- Order-matching Contract - Responsible for receiving all offers from Oracle vendors after Service Level Agreements (SLAs) have been accepted and registered.
- Aggregating Contract - compares the results of all bets of all those who use the data source. It also sends the data required in the reputation contract.
The network also has three stages: oracle selection, data presentation, and result average.
- Oracle Selection - The user declares some parameters that define his SLA offer. The proposal covers everything from query parameters to the amount of data required, even required components. Users must submit and comply with the SLA via the offline system before completing everything via the intragrid system; upon completion, the data source executes the detailed instructions given in the SLA.
- Reporting − As soon as the data source executes instructions through autonomous systems, it sends reports to the network system.
- Average result value - once the result has been declared, it will be sent to the aggregation contract for compilation and evaluation of the fair result.
Off-chain network
This entails an intertwining of nodes in the Ethereum network. Nodes act individually, receiving responses to queries on the network. This system consists of three main elements: the core, external adapters and subtask schemes, each of which is responsible for all work with the blockchain, such as creating and balancing its schedules, helps the oracle to easily implement any programming language. , and ensuring that all adapters in the link are in perfect sync accordingly.
Blockchain is a representation of cryptographic connections of blocks, each of which has the mathematical data of the first embedded. They are tamper-proof, which guarantees the safety of every line of information they contain. It was created in 2008 by people who identify themselves as Satoshi Nakamoto to act as a shared ledger or bitcoin file. Several other public cryptocurrencies are now using the blockchain design for payment options. Private firms are expected to apply to businesses around the world.
Smart contracts are software protocols that run as soon as some predefined settings are reached. They typically operate as a two-way system, eliminating the need for an external side for verification. As a rule, they are automated, so they are great for performing transparent transactions used by the general public. Another major advantage of using this variant of the service is that they are immune to hacking after they have been created, even the people who created it cannot interfere with its process.
They usually get their information from data sources or APIs, commonly referred to as "oracles." The problem is that smart contracts can only do what has been given to them, which means that if incorrect codes or corrupted data are loaded into them, they will still be treated in the same way as good codes and data. The main difference is that the result shows “incorrect” instead of what was originally expected.
What made Chainlink so popular was that they found a way to solve the problems with Oracles by figuring out how to communicate properly without compromising the value or quality of the data being transmitted. The process entails the development of several separate nodes that act as separate smart contracts and then act as a link between the main smart contract and the data source. This new method has proven its importance and effectiveness when applied in several areas of the economy, such as:
- Securities - Processes related to stocks and bonds refer to Oracles, which provide updated information about the state of securities in the market and the interest received on them, before transactions are made.
- Insurance - Updated incident information will be required in order to properly investigate prior to paying the premium to the previously insured.
Another problem that Chainlink managed to get around was the inability of several other smart contract services to send data to external networks. The Chainlink service can now send data to services such as payment networks as long as it is verified as a tamper-proof contract.
What is $ LINK token?
Altcoin's $ Link token is the Chainlink cryptocurrency. It was released in 2015 using the ERC677 token; The principle of operation of this cryptocurrency is based on the ERC-20 token and is only available on the Ethereum market network. Despite the negative impact of the coronavirus pandemic on $ Link and several other cryptocurrencies, there has been a significant increase in its market value recently; the current value of one is currently in the region of $ 17, which puts it in 8th place on the list of securities with the highest market capitalization.
Altcoin includes all currencies that serve as a replacement for the legendary Bitcoin. Although they are built and evolve on many of the principles of their predecessor, they strive to identify weaknesses and develop them in order to compete properly with bitcoin. There are several categories of altcoins, namely: mining, stable, secure, as well as regular and utility tokens. There is a possibility that an altcoin belongs to more than one group.
However, it differs from others because its main use is bidding, serving as a bridge between buyers and sellers of certain information. Node providers use $Link tokens to make offers to potential buyers. If this fails, they are required to provide every piece of information that the buyer requires using data sources and then receive their payout in the form of additional tokens.
Many are wondering why payouts should be in the form of $ Link tokens rather than some other form of currency, but improving the performance of tokens in the market has proven to be a smart choice. Additional facts that value increases with the number of users, reward and punishment systems, respectively, for those who gain a few over a certain period, and those who tend to try to interfere with the system, only further hold the firm's interest in compliance with the home cryptocurrency.
Key Chainlink partnerships
Chainlink's uniqueness has led to its popularity, which means it has formed partnerships with several leading firms to deliver its services without those firms requiring a new operating system. Below are some of the main partners:
- Cryptocurrencies – Despite having their own, Chainlink has teamed up with larger cryptocurrencies to provide their data source services to larger blockchains such as Hyperledger and Bitcoin. This collaboration only further opened up its services to several others.
- Synthetix – Collaboration in early 2019 with Ethereum-powered equity and equity trading platform Synthetix by providing a data source for the firm’s price feeds – another partnership that has proven fruitful for the service.
- Google – Tech giants Google have also benefited from the use of Chainlink data sources/oracles as they help improve the transfer of information between multiple blockchains, and BigQuery which harnesses the computing power of Google’s infrastructure.
- Chinese Government – With the Chinese government aiming to build its own blockchain service network, the collaboration with Chainlink as the basis for all blockchain network operations is a testament to the uniqueness of the services offered.
- SWIFT is a telecommunications company that intertwines the banking industry. Using the Chainlink service ensures that customers around the world can now transfer money into cryptocurrency transactions in real time.
Other notable mentions include partnerships with Docusign, an online betting platform, and BetProtocol, a gambling establishment that provides its unique Oracle service.
The future of Chainlink and $ LINK
The aforementioned partnerships show how the Chainlink service has revolutionized many industries, including but not limited to cryptocurrencies. However, the future of the blockchain and DeFi industry looks promising as the world leans towards more technological methods.
The $ Link token has seen tremendous progress in the first half of 2020 and has continued to do so in the third quarter. With a market capitalization of $ 4 in May 2020, but now it has reached $ 17, which means a 250% increase. Although the sudden rise was quite unexpected, experts predict that the share price will continue to rise in the near future.