ChainLink is a public ledger oracle platform. It connects blockchain-based smart contracts to the real-world applications, external data and an API. This platform developed on the basis of the Ethereum blockchain. It aims to bridge the gap between smart contracts on the blockchain and the real-world applications. ChainLink finds and verifies real-world data and bring it on-chain to be combined into smart contracts using “oracles”. The purpose of the project is to optimize the use of smart contracts. In addition make it more popular than before and also eliminate the imprecision and errors in informing.
What is chainlink?
Since Ethereum announced in 2015, it revolutionized the traditional businesses and legal processes. Smart contracts changed the game and blockchain was no longer just a tool to use it as a medium for financial transactions. Although Ethereum could make more use cases for blockchain technology and improved industries, still had a problem. smart contracts could only manage data on the blockchain. So, the Ethereum smart contracts lack a bridge to real-world industries, which it was trying to improve.
The ChainLink came as a first decentralized oracle service to fix the problem. ChainLink makes smart contract users be able to retrieve data from off-chain sources like application program interface (APIs) and merge them into the blockchain. In fact, it takes external information from all other sources and puts it on-chain to blockchain applications.
How does chainlink work?
To use the chainlink network first companies need to offer payments in Chainlink token called LINK, so the necessary data for the proper work of the smart contract provides by oracles.
Several oracles will be requested for a single request. Each oracle will use different data sources to produce result and finally it will be written on the blockchain.
There is option on the network, which the users can as their request to be processed only by oracles who have staked LINK tokens. This option added to avoid problems of collusion or cheat. these oracles will earn more LINKs if they could process a large number of requests.
In order to earn the LINKs token the data proposed should get confirmed by majority of oracles. In case if the data proposed does not get confirmation from majority of oracles, not only the users not get paid, but also they lose some amount of LINKs they have staked.
Furthermore, the data provided by oracles rate by the customer smart contracts mangers to have more reliable data sources.
ChainLink could connect the smart contracts with the real-world. It makes parties to be able to create payment outputs such as bank payments. By using ChainLink Network, anyone would be able to securely provide smart contracts with access to key external data and get reward in return. The reward in chainlink network is very similar to the reward that miners get in other cryptocurrency networks. The Node Operators who provide useful data to the network will get the reward.
ChainLink makes institutions and businesses to be able to benefits from the features like decentralization, trust and immuntability without the expense of creating new system or network.