Which problem is Chainlink solving?
The simplest way to explain it is by saying all blockchains are blind. They can’t see our real world, they can’t trust our real world. Chainlink aims to solve trust for blockchains. It wants to become a definitive truth machine. It provides stable & secure data as the data that comes through Chainlink is decentralized & aggregated. It aims to connect any blockchain to different inputs & outputs.
Here’s Vitalik (in 4k) explaining how much he values Chainlink to provide accuracy & fast data feed for a general-purpose blockchain.
Chainlink is called an Oracle Network. Oracles are data feeds that connect Ethereum & other blockchains to off-chain, real-world information so that you can query data in your smart contracts.
Chainlink is the missing piece that enables off-chain & on-chain communication.
How does Chainlink help data providers?
Chainlink has several data provider categories based on the companies that provide data. Companies can earn revenue in the smart contract economy by providing their data to earn $LINK & also write smart contracts to build applications on this stack to create contracts secured by Chainlink.
Who is currently a chainlink data provider?
Here’s a list of Chainlink data providers today.
How does Chainlink help blockchains?
Without reliable data points, the blockchains can’t effectively execute smart contracts with a level of certainty. Chainlink providers 3 layers of aggregation for blockchains so they can safely execute their smart contracts.
1. Price data aggregators (e.g. BraveNewCoin, CoinGecko)
They collect raw data and create refined datasets across all trading environments. They collect data from centralized sources and also decentralized protocols.
2. Node Operator Aggregation (2nd layer of aggregation)
Node operators within Chainlink Price Feeds source price data from multiple independent data aggregators and take the median (middle) value between them, mitigating outliers and API downtime. This means that not only does each individual data source reflect an aggregated price point from all trading environments, but each individual node’s response represents an aggregate from multiple data sources, further preventing any single source from being a point of failure.
3. Oracle Network Aggregation (third layer aggregation)
Chainlink Price Feeds aggregate the responses of numerous security-reviewed node operators and takes a median, requiring a predefined threshold to respond in order to trigger an on-chain price update (e.g. minimum of 14 out of 21 in the example below). This type of oracle network aggregation ensures that the oracle network as a whole maintains high uptime and resistance to manipulation in its delivery of data on-chain, even in the unlikely scenario that a few nodes or data sources were to go offline or attempt to perform malicious activity.
Over 100+ blockchains, lending protocols, decentralized exchanges, stablecoins, payments, yield & asset management systems use Chainlink today.
How is Chainlink helping the real world today?
For eg: this is Chainlink in the insurance industry:
- Policy is deployed on the blockchain (such as Ethereum).
- Chainlink provides high-quality data to the blockchain through various trusted data providers like NASA & Accuweather. More high-quality data from a variety of providers is always better.
- If flooding occurs based on the above data, pre-defined smart contract agreements will automatically trigger & the farmers (policy holders) will receive their payments.
Chainlink will continue to play a significant role in the below areas & much more. New use cases will arise, many more hybrid smart contracts will be written.
Decentralized Finance - External Payments - NFTs, Gaming, and Randomness
- Insurance - Enterprise Systems - Supply Chain - Utilities - Authorization and Identity - Government - Sustainability - Off-Chain Computation
Why Chainlink?
Chainlink enables cryptographic truth, it aims to be a definitive truth machine. Chainlink plays a key role in creating a hybrid smart contract culture for our future. It provides deterministic output through cryptographic truth.
What is the future of Chainlink?
Chainlink today continues to deliver value through data aggregation, privacy, security & scaling. Chainlink will continue to establish dominance as the cryptographic truth machine.
Blockchain —> Chainlink —> Web (which requires a reliable source of truth)
Who backs Chainlink?
A lot of important people.
Sergey Nazarov, CEO @ Chainlink Labs
How much capital has Chainlink attracted so far?
2018 March - Chainlink was at 84th position ranked by market cap.
2022 March - it’s a top 25 coin.
There are many more oracle networks today but Chainlink has captured way more capital than the next best competitor.
Here’s the ranking by market cap of different oracle networks today.
So let’s ask again how important is Chainlink?
It’s as important as the value of truth in today’s world.
Over 1213 projects use Chainlink today. View the entire Chainlink ecosystem in one place here.
Btw, rough draft of your membership NFT (I’ll soon be asking for your wallet addresses, please install metamask from here, if you’re still struggling you can follow this tutorial as well or checkout a youtube video).
