Chainlink is a decentralized network of nodes that provide data and information from off-blockchain sources to on-blockchain smart contracts via oracles, which has been developed since 2015.
Nowadays, smart contracts have been used for everything from creating novel crypto-financial products to develop new crypto assets. However, most smart contracts need to rely on some kind of external data source to properly execute their terms. Understanding this problem, Chainlink was created to act as a bridge between blockchain smart contracts and external data sources. Because each oracle within the Chainlink network is assigned a reputation score, they will be incentivized to supply users with precise data. Moreover, when nodes follow the software’s rules and provide useful data, they will be rewarded in Chainlink’s cryptocurrency, LINK.
- Chainlink Network (LINK) aims to provide tamper-proof inputs and outputs of data for smart contracts on any blockchain.
- An individual can receive on-chain and off-chain data by connecting his smart contracts to various data sources and third-party APIs. One can also send data to parties outside of the blockchain she uses via the Chainlink Network.
- Chainlink's Meta Oracle provides data aggregation and reaction services, which enables developers to further improve the functionalities of their smart contracts.
- The Chainlink token (LINK) is an ERC-677 token used as the payment for all services the Chainlink Network provides.
Key Features and Highlights
First of all, ChainLink has smart contracts processed directly on the chain. These data administration contracts will handle the requested data of the users. This means that if a user wants to access data off-chain, they need to send a request contract to the ChainLink network. The blockchain will then process these requests in a separate contract.
Secondly, there are three types of contracts to handle management system requirements, including: Reputation contract, order-matching contract, and aggregating contract. With these contracts, ChainLink will go through a process having three steps as follows: oracle selection, data reporting and result set.
Off - chain function:
Besides the first component - smart contracts, the second one is the off-chain administrative node. At present, ChainLink only connects to smart contracts on the Ethereum network, and the responsibility of these nodes is to collect data from the off-chain source, then follow the requirements of the contract agreement. Next, the data will be processed by ChainLink Core and passed to the on-chain contract to match the results.