Chainlink is a decentralized blockchain oracle network built on Ethereum. The network is intended to be used to facilitate the transfer of tamper-proof data from off-chain sources to on-chain

smart contract A smart contract is a computer program or a transaction protocol that is intended to automatically execute, control or document events and actions according to the terms of a contract or an agreement. The objectives of smart contracts are the re ...

s. Its creators claim it can be used to verify whether the parameters of a

are met in a manner independent from any of the contract's stakeholders by connecting the contract directly to real-world data, events, payments, and other inputs.

History

Chainlink was created in 2017 by Sergey Nazarov and Steve Ellis, who co-authored a white paper introducing the Chainlink protocol and network with Cornell University professor Ari Juels the same year. Chainlink acts as a "bridge" between a

blockchain A blockchain is a type of distributed ledger technology (DLT) that consists of growing lists of records, called ''blocks'', that are securely linked together using cryptography. Each block contains a cryptographic hash of the previous block, a ...

and off-chain environments. The network, which services

smart contracts A smart contract is a computer program or a transaction protocol that is intended to automatically execute, control or document events and actions according to the terms of a contract or an agreement. The objectives of smart contracts are the re ...

, was formally launched in 2019. In 2018, Chainlink integrated Town Crier, a trusted execution environment-based blockchain oracle that Juels also worked on. Town Crier connects the Ethereum blockchain with web sources that use HTTPS. Chainlink's trademark was registered in the

Cayman Islands The Cayman Islands () is a self-governing British Overseas Territory—the largest by population in the western Caribbean Sea. The territory comprises the three islands of Grand Cayman, Cayman Brac and Little Cayman, which are located to the ...

on 2019-03-12, the corporation created being Smartcontract Chainlink Sezc,

Ltd. A private company limited by shares is a class of private limited company incorporated under the laws of England and Wales, Northern Ireland, Scotland, certain Commonwealth countries, and the Republic of Ireland. It has shareholders with limit ...

In 2020, Chainlink integrated DECO, a Cornell project co-created by Juels. DECO is described by its authors as a protocol that uses

zero-knowledge proofs In cryptography, a zero-knowledge proof or zero-knowledge protocol is a method by which one party (the prover) can prove to another party (the verifier) that a given statement is true while the prover avoids conveying any additional information a ...

to allow users to prove information is true to a blockchain oracle without revealing sensitive information, such as birth dates. Chainlink published a second white paper in April 2021. That paper, ''Chainlink 2.0: Next Steps in the Evolution of Decentralized Oracle Networks'', detailed a vision for expanding the role and capabilities of decentralized oracle networks to include hybrid smart contracts, which utilize on-chain code and off-chain services provided by oracle networks.

Technology

Chainlink's decentralized oracle network is an

open-source Open source is source code that is made freely available for possible modification and redistribution. Products include permission to use the source code, design documents, or content of the product. The open-source model is a decentralized sof ...

technology infrastructure that allows any blockchain to securely connect to off-chain data and computation resources. The network

nodes In general, a node is a localized swelling (a "knot") or a point of intersection (a Vertex (graph theory), vertex). Node may refer to: In mathematics *Vertex (graph theory), a vertex in a mathematical graph *Vertex (geometry), a point where two ...

fetch, validate, and deliver data from multiple sources onto blockchains to execute smart contracts. In addition to the transfer of external information to a blockchain, Chainlink can also be used for several different off-chain computation functions, including a

verifiable random function In cryptography, a verifiable random function (VRF) is a public-key pseudorandom function that provides proofs that its outputs were calculated correctly. The owner of the secret key can compute the function value as well as an associated proof for ...

(VRF) and data feeds. The data feeds have been used to bring election data on-chain. Chainlink's VRF can be used for random number generation which can be used in decentralized gaming. '' ZDNet'' reported the verifiability of the random number generation ensures the in-game results are tamper-proof.

Link token

Node operators are compensated with the network's native

cryptocurrency A cryptocurrency, crypto-currency, or crypto is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. It i ...

, LINK. Chainlink's LINK token is an ERC677 token, an extension of ERC-20. Tokens act as data payloads, feeding the required data from off-chain sources to smart contracts, which then act accordingly in response to the data provided by the token. According to Chainlink, the trade value derived from these tokens is used to pay node operators for retrieving data from smart contracts, and also for deposits placed by node operators as required by contract creators. Tokens can be stored in any ERC-20 wallet, as the ERC677 token retains all the functionality of an ERC-20 token.

References

{{Cryptocurrencies Cryptocurrencies Ethereum Ethereum tokens