What is Chainlink (LINK)?
Chainlink is an oracle network that allows blockchains and smart contracts to interact with data off-chain. Founded in 2017, Chainlink was one of the first networks to integrate off-chain sources of data to provide critical information for smart contracts applications. A key issue that Chainlink set out to solve was how to securely interact with external data feeds in a decentralized fashion. It achieved this by allowing users to earn revenue in exchange for functioning as node operators for the decentralized oracle network. Essentially, node operators help validate and process critical data that protocols such as Synthetix, Aave, and Compound require.
What makes it unique?
One of the first and largest decentralized oracle networks;
An oracle network is a service that connects functionality that lives on-chain (like smart contracts) to data that is hosted elsewhere on the internet (off-chain);
Serves as an abstraction layer to allow smart contracts to connect to off-chain sources for critical market data in a decentralized way;
LINK is the ERC-20 token that allows users to send and receive information on the Chainlink protocol;
Chainlink doesn’t have a native blockchain, instead, it provides utility to multiple blockchains simultaneously;
Chainlink purchases and collects data from a wide variety of sources and aggregates it into a stream of data which it then provides to blockchain services.
Smart contracts frequently require real-world market data (such as asset price updates), but trusting the data to be correct and accurate as well as trusting the person providing the information was tricky before oracle services came along. Chainlink set out to solve the issue of connecting smart contracts globally without compromising security or decentralization. Chainlink relies on an “army” of node operators, which are rewarded for their service, to validate market data which translates into billions of dollars of transaction value on protocols like Aave and Synthetix. Users interested in learning more about operating a node and joining the Chainlink network can do so here.