Table of contents
WHAT YOU WILL LEARN / OVERVIEW :
- what is an Oracle?
- what are Smart Contracts?
- what is the Oracle problem?
- what is Chainlink / what does it have to offer?
- how does Chainlink work?
- what are Chainlink tokens (LINK)?
- use cases of Chainlink?
For understanding chainlink first, we have to understand the basic concept of oracle and smart contact:
A blockchain oracle is a third-party service that connects smart contracts with the outside world, its main purpose is to feed information in from the world and vice versa. It is also called the blockchain middleware as it connects blockchain with real-world data. Information from the world encapsulates multiple sources so that decentralized knowledge is obtained. In order to learn deeply about oracles, their pros, and cons, etc.
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If you prefer a video then :
Smart contracts are programs stored on a blockchain that runs when preset conditions are met. They typically are used to automate the execution of an agreement so that all participants can immediately get the outcome, without an intermediary’s involvement or time loss. In order to learn more about smart contracts
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The oracle Problem:
Blockchains themselves cant access off-chain data, which means that data is coming from a single source by this the entire concept of dencentrality is gone. (explained down)
Data is then coming from centralized oracles by which the security risk increases exponentially.
CHAINLINK SOLVES BOTH OF THESE ISSUES AND IS THE STANDARD FOR DECENTRALIZED ORACLES
What is chainlink?
Smart contracts need data for executing commands and cannot fetch external data due to the isolated nature of blockchain networks, because of this smart-contract devs face issues in leveraging outside data in their program for e.g real-world data sets, prices, and IOT systems so that's why they have relied on blockchain oracles which help them in obtaining data from external sources but oracles mostly are centralized which means that the source of data is one by which the security risk is increased and smart-contract then is solely dependent on the oracle, here chainlink comes saving the situation ⬇️
Chainlink facilitates better interconnectivity among smart contracts. Now smart contracts can enjoy decentralized oracle service to access datasets, APIs, and also many other resources this basically works as an intermediary between on-chain and off-chain systems. The primary components of its ecosystem include the Chainlink cryptocurrency, LINK token, and the blockchain, i.e., the LINK network.
SO BOOM BOTH ISSUES ARE SOLVED, IF YOU LIKE A VIDEO HERE IS THE BEST : Chainlink?
HOW DOES IT WORK?
Since Chainlink essentially aims to bridge the gap between off-chain and on-chain resources, there are two significant factors that we must consider:
• Off-chain infrastructure - Off-chain resources are oracle nodes that exist off the Chainlink network and are connected to the external blockchain. Most of the work performed by the Off-chain Oracle is done through the collection of the data requested by the user. Requested data passes through ‘Chainlink Core’ - a software that establishes a connection between the Off-chain data and the Chainlink network. Chainlink Core then retrieves the process data and delivers it to the On-chain Oracle.
• On-chain infrastructure - On-chain Oracles consider user requests for Off-chain data submitted to the blockchain and process them. The requests are finally routed to the appropriate smart contract.
The Chainlink Network is driven by a large open-source community of data providers, node operators, smart contract developers, researchers, security auditors, and more. The company focuses on ensuring that decentralized participation is guaranteed for all node operators and users looking to contribute to the network.
Chainlink created the LINK token to pay node operators within its system. The value and demand for LINK tokens are derived from the number of node operators available to provide off-chain services to Chainlink. As more LINK tokens are used as the Chainlink system’s currency, the more valuable the token should become.
LINK is built on Ethereum in accordance with the ERC-20 standard for tokens. It can be bought and sold for fiat currency or other digital currencies.
Coinmarketcap link :
USE CASES OF CHAINLINK:
Chainlink provides state of the art security and reliability by which it is used and can be used in many many places some of them are :
Decentralized Finance (DeFi)
Many traditional financial products like loans, payments, derivatives, asset equity, and more are being built on the blockchain using smart contracts to increase their security and transparency and reduce barriers to entry. These DeFi applications use Chainlink to price assets, access interest rates, verify collateralization, and more, which enable these products to perform functions like issue a loan at fair market value, automate the issuance of dividends and settle an options contract.
Smart contracts are also being leveraged to create parametric insurance contracts on the blockchain. Chainlink is currently being used in production to provide weather data to the Arbol crop insurance market, enabling farmers all over the world to obtain parametric crop insurance simply with an Internet connection, which is settled in a fair and timely manner according to the amount of rainfall, temperature, or other evaluators the policy is set to (e.g. if it rains more than x amount this year, payout y settlement).
Developers are also beginning to launch smart contract-based gaming applications on the blockchain that often incorporate non-fungible tokens (NFT) as scarce digital collectibles. One of the key building blocks of many blockchain games is a source of randomness to generate random in-game scenarios or determine the lucky winner of prizes. Chainlink provides a randomness solution called VRF, which generates randomness and delivers it to the smart contract in a manner where users can prove it is fair and unbiased, as neither the players, game creators, or external entities can tamper with or manipulate the randomness to their advantage.
IT DOES NOT STOP THERE ARE MANY MORE USE-CASES FOR IT :
START FROM HERE
If you need further help you can also learn about its development from crypto zombies
The future of chainlink is clearly evident from what it has to offer, its security, reliability, and true decentralization make it way above others and we can assess from this fact that eventually, chainlink has to be adopted by other blockchains as well at some point. Also, it will take supply chain management, insurance, health, and other major sectors by storm. Also, it's a good token to invest in as well as there is no staking as of now and its price is really low than its previous ATH.
Best Twitter Account to follow for Chainlink: https://twitter.com/PatrickAlphaC
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