Friday, October 7, 2022

What is Chainlink (LINK)?

The introduction of Bitcoin (BTC) and its subsequent surge in popularity have led to a steady expansion of the cryptocurrency landscape, birthing new ways to bridge the gap between traditional financial markets and cryptocurrencies. These efforts include the Chainlink ecosystem, which intends to improve interoperability in the blockchain industry.

Chainlink is a distributed oracle service that is not controlled by a single entity. Because of its decentralized nature, it allows smart contracts access to dependable data feeds, APIs, and payments, bridging the gap between real-world applications and blockchain-based smart contracts.

It was established in June 2017 by SmartContract, a San Francisco-based tech company. Sergey Nazarov, the project’s CEO, and Steve Ellis, the project’s CTO, lead the team. Sergey Nazarov, a serial entrepreneur, founded SmartContract, Secure Asset Exchange, and CryptoMail, a decentralized email network. Steve Ellis on the other hand worked as a software developer at Pivotal Labs and Secure Asset Exchange before co-founding SmartContract.

The LINK network and the LINK token serve as the foundation of the Chainlink ecosystem. Although Chainlink solutions currently run on the Ethereum blockchain, the company anticipates that it will soon be able to support other major smart contract chains in addition to the Ethereum blockchain.

Mechanism of the Chainlink System

The Chainlink protocol gathers information from a variety of nodes, and comes to an agreement, before handing over the data to the smart contract. By this means, smart contracts can now operate without relying on one oracle. Existing on the Chainlink network are the on-chain and off-chain data that interact with one another.

On the Ethereum blockchain, Oracle contracts comprise Chainlink’s on-chain components. They are responsible for tracking and reacting to user data requests. This Chainlink system is made up of three main parts:

Reputation Contract – this contract is responsible for tracking all metrics relating to the performance of the Oracle service. 

Order Matching Contract – this contract is responsible for accepting bids from Oracle providers, as well as for establishing Service Level Agreements (SLA).

Aggregating Contract – this contract aggregates the results of all bids received from all parties utilizing the data source. Additionally, it transmits the data required for the reputation contract.

Another critical component of the Chainlink architecture is off-chain oracle nodes that connect to the Ethereum network. This necessitates the intertwining of the connections between nodes on the Ethereum network. When a request is made, individual nodes communicate with the network and retrieve responses to it. Fundamental components of this system are the core, external adapters, and subtask schemas. 

The Issues Chainlink Aims to Solve 

Founded in the Cayman Islands, Chainlink aims to foster innovation in the Web3 space, connecting sophisticated smart contract inclusions to the real world.

If they are to outperform today’s insurance bonds, e-signature, and international bank transfers, smart contracts must include a secure and trustworthy channel for obtaining and validating external events such as market prices, Internet of Things (IoT) events, and shipping data.

Chainlink is building such a route through the use of networks of decentralized, independent oracle providers in order to offer the greatest levels of data security and accuracy available today.

Additionally, it is collaborating with everyone it can, from large corporations to decentralized entrepreneurs. To create a similar environment to those that existed before e-commerce took off on today’s internet platforms, Chainlink believes that building this ecosystem will speed up the development and spread of smart contracts. The following is what we consider to top our canonical list:

SWIFT

A telecommunications business that has ties to the financial services industry. Customers from all over the world may now conduct real-time money-to-cryptocurrency transactions thanks to Chainlink’s service.

Google 

Chainlink’s data sources/Oracles have benefited technological behemoths including Google as well. Chainlink helps in improving data transmission between multiple blockchains and BigQuery.

Chinese Government

The Chinese government’s decision to integrate Chainlink as the cornerstone for its own Blockchain Service Network (BSN) is a compliment to the distinctiveness of the service it provides, as demonstrated by its engagement with the company.

Other companies actively utilizing Chainlink solutions include Betprotocol, Signal Capital, Request Network, and Wanchain among others.

What is the Function of the Chainlink (LINK) Token? 

The Chainlink token, LINK, is built on Ethereum using the ERC-20 standard. There are no restrictions on its use and can either be exchanged for fiat money or any other kind of digital asset.

Contract holders utilize the Chainlink coin to reimburse node operators for the services they provide. Operators of Chainlink nodes determine their service costs in accordance with the amount of data they give and the amount of money that consumers are prepared to spend.

Furthermore, node operators can stake money in the network by utilizing the LINK token. In such cases, node operators make a deposit of their LINK tokens into the Chainlink ecosystem to show their commitment to the network and to the community.

When matching nodes with different requests for information, the Chainlink Reputation Contract takes into consideration the amount of Chainlink coin a certain node has staked, as well as a few more factors.

Increased stake in the network increases the likelihood of nodes being selected to complete requests, therefore raising the number of LINK tokens they receive in exchange for their efforts.

In the Ethereum blockchain, Chainlink is an ERC-20 token that may be stored in any wallet that accepts Ethereum tokens as a kind of digital currency. The most popular wallets are Metamask, MyEtherWallet, and Trust Wallet.

Similar Projects to Chainlink

In the DeFi business, Chainlink is a relatively new initiative that has already drawn a significant number of developers. Dozens of protocols are already supported by the Chainlink ecosystem, which spans a wide range of industries.

More than 300 projects have been integrated into Chainlink’s ecosystem to date, thanks to the recognition of the innovative solutions it offers. Some of these projects include;

  • The BOSAGORA Project, one of the most recent additions to Chainlink’s portfolio. The BOSAGORA staking pool investment model, which is based on a decentralized blockchain platform, allows investors to make democratic decisions about which projects to fund and which ones not to support. BOA is the native token of the system.
  • Gnosis (GNO) is a decentralized market where people can bet on what will happen in the future.
  • Mobius (MOBI) creates oracles on the native dApp store for consumer applications.
  • Augur (REP) focuses on oracles for prediction markets, which let people gamble on future events.

Chainlink and LINK’s Long-Term Viability 

Many businesses, including but not limited to the cryptocurrency industry, have benefited from the Chainlink service, as demonstrated by the collaborations listed above. There is a bright future for blockchain and distributed ledger technology businesses as the world shift toward more technological solutions which Chainlink has to offer.

During the first half of 2020, the $Link token made significant progress, which continued into the third quarter of the year. The price was a mere $4 in May 2020, and it is now valued at $17, an incredible growth push.

The share value is projected to continue to rise in the near future. According to prominent analysts, Chainlink is projected to be valued at more than $40 by the end of the year 2022. At $11 billion in market value, it is currently one of the most valuable cryptocurrencies in the world, and it is positioned to rise even more. This can make for a potentially viable investment opportunity coupled with the company’s past record.

Ayo Alabi
Ayo Alabi is an experienced writer and Fintech enthusiast, passionate about educating people and helping businesses that want to see their Google search rankings surge. Her articles have appeared in a number of e-zine sites, with focus on balancing informative with SEO needs–but never at the expense of providing an entertaining read.

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