Overview
Chainlink is a decentralized oracle network and cryptocurrency that provides data to blockchains. It is one of the primary data sources used to feed information to applications in decentralized finance. ChainLink is headquartered in the Cayman Islands and was founded in September 2014 by Sergey Nazarov, Steve Ellis, Craig Siel, and Adam Hayes. It was founded as an open-source protocol developed by Chainlink Labs (formerly known as SmartContract Ltd). The Chainlink Network went live on the Ethereum mainnet on June 1, 2019, and has since expanded to support additional blockchains and layer 2 networks.
In 2019, Google announced that it was integrating its BigQuery data analytics platform with Chainlink, allowing data from outside sources to be used in applications built directly on the blockchain. In 2020, the Associated Press announced that the voting data for the 2020 Presidential Election it was posting to Everipedia used Chainlink.
Platform
Chainlink connects smart contracts to any, or all, external systems and APIs. It acts as a secure blockchain middleware and decentralized oracle network that aids in connecting smart contracts with critical resources of external data and other external software systems. ChainLink nodes offer APIs that allow the completion of smart contract agreements and streaming of data feeds to and from blockchain networks, such as Ethereum, Bitcoin, and Hyperledger.
Data feeds
Through their platform, Chainlink offers data feeds, which provide a decentralized source of off-chain data to power smart contract use for DeFi, among other use cases. This can help introduce new types of data and new use cases for smart contracts, with Chainlink working to provide reliable and secure infrastructure for the data feeds, using data sources that avoid manipulation, capable of integrating in other blockchain's smart contracts as the data feeds are blockchain agnostic to support smart contracts everywhere.
VRF
Chainlink VRF was developed to provide on-chain randomness that is cryptographically secure for blockchain-based applications. It includes a tamper-proof design with low cost randomness for smart contracts, including a random number generator with what Chainlink calls provably-fair and verifiable randomness.
Keepers
Chainlink's Keepers are developed to automate smart contract functions, offering decentralized execution intended to be highly secure and cost-efficient. The Keepers are also capable of off-chain computation for smart contracts, to help developers build more feature-rich dApps. The Keepers allow developers to use automatic triggers based on time or schedules, custom computation, Chainlink oracle data, any on-chain activity, and block number.
Proof of Reserve
Chainlink's Proof of Reserve is developed to enable the monitoring of reserve assets using automated audits based on cryptographic truth. This can be used to find any asset's true collateralization, to reduce risk and improve transparency for users while offering a chance to reduce DeFi failures by protecting DeFi applications from insolvency through the auditing of reserves.
Cross-Chain Communication
The Chainlink Cross-Chain Interoperability Protocol (CCIP) offers a universal and open standard for developers to build services or applications that can communicate across multiple networks. This can include sending messages, transferring tokens, or initiating actions across these networks, for various applications or smart contract reporting. The CCIP offers a chance to develop additional oracle nodes to achieve off-chain consensus and validate cross-chain transactions.
It is supposed to be secured by the Anti-Fraud Network, which is an independent network of nodes that proactively monitor a network to detect fraudulent activity and take action to protect and prevent it in a trust-minimized way. Further, CCIP is also developed to provide an easy to integrate interface to ensure developers do not need to create custom code necessary to integrate with each chain.
Token
LINK is Chainlink's native token is used by smart contracts to pay fees to Chainlink nodes for the services they provide. The cost of maintenance is set by the nodes themselves, depending on the demand for a particular type of data in the market. The LINK token is Ethereum-based ERC-20, which has technology that delivers price feeds into various decentralized finance applications. LINK aims to curb dishonest centralized data-feed providers by using a distributed network of nodes to verify data it receives from sources.
