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Chainlink (LINK) is a blockchain abstraction layer that enables globally connected smart contracts. It was founded in 2017. Through a decentralized oracle network, Chainlink enables blockchains to securely connect to external data streams, events, and payment mechanisms, providing the critical off-chain information that sophisticated smart contracts need to become the dominant form of digital settlement.
The Chainlink network is supported by a broad community of open source data producers, node operators, smart contract developers, researchers and security auditors, among others. The company is committed to enabling decentralized participation for all node operators and contributors to the network.
Who Created Chainlink?
Sergey Nazarov is the co-founder and CEO of Chainlink Labs. He holds a degree in Business Administration with specialization in Philosophy and Management from New York University. He started his career as a professor at NYU Stern School of Business. ExistLocal is a peer-to-peer marketplace for real local experiences launched by Nazarov in 2009.
In 2014, he co-founded CryptaMail, a fully decentralized email service based on blockchain technology. In 2014, Nazarov and Steve Ellis founded SmartContract, a platform that revitalizes smart contracts by connecting them to external data and widely accepted bank payments. SmartContract was one of Sergey Nazarov’s initiatives that led to the creation of Chainlink.
Steve Ellis graduated from New York University in 2010 with a degree in computer science. After graduation, he started working as a software developer at Pivotal Labs. In 2014, he founded Secure Asset Exchange, a company that provides Internet access to a decentralized asset exchange.
Why Do People Buy LINK?
Chainlink is one of the first networks to enable the inclusion of off-chain data in smart contracts. Chainlink is one of the largest data processing companies thanks to its many well-known partners. Chainlink has attracted the attention of many well-known data providers, including Brave New Coin, Alpha Vantage, and Huobi, because of its off-chain data integration. Data providers can monetize their data by selling access to their data directly to Chainlink.
As a decentralized network, Chainlink allows its users to become node operators and make money by running the data infrastructure necessary for the success of their blockchain. Chainlink leverages a large number of node operators to run multiple decentralized price feed oracle networks in production, delivering billions of dollars of value to leading DeFi applications such as Synthetix, Aave, and Compound.
Google Has Struck a Deal With Chainlink!
Chainlink has moved beyond collecting and transmitting Bitcoin exchange rate data to DeFi protocols like Aave, and now offers much more. The ecosystem currently provides access to more than a billion data points and offers more than $75 billion in value through 700 Oracle networks and a thousand project integrations. Chainlink has worked with leading companies such as AccuWeather, FedEx, FlightStats and Associated Press on data validation. One of Chainlink’s biggest successes was the appointment of former Google chairman and CEO Eric Schmidt as a technical advisor to Oracle Network Protocol. Schmidt is interested in helping Chainlink create a fact-based world because “Chainlink is a hidden component to unlocking the promise of smart contract platforms and transforming business and society.” Schmidt joins other senior advisors to Chainlink, including the former CEO of LinkedIn and co-founder of DocuSign.
Chainlink will enable staking so LINK holders can protect the network and earn rewards in the 2022 plan. Chainlink has been developing a solution for staking for years, but oracle networks are a type of decentralized computation, not blockchain. Co-founder Nazarov said Chainlink doesn’t generate blocks, but “creates an agreement on pricing data across hundreds of oracle networks.” Nazarov said the team is finally satisfied with the security and scalability of the consensus mechanism and is ready to begin staking later this year.
Chainlink aims to bring a new level of “crypto-economic” security to the Oracle Network with LINK Staking. It does this by enabling ecosystem players such as node operators and community members to strengthen the security of Chainlink’s Oracle services by securing them with LINK tokens.
This works similarly to other crypto-staking platforms, where players on a proof-of-stake (PoS) network must deposit a certain amount of tokens to contribute to the network’s security.
How is LINK Distributed?
Chainlink has been criticized for relying on a small number of trusted nodes, despite its efforts to increase decentralization. However, the introduction of LINK is intended to solve this problem.
LINK staking will include rewards and penalties to incentivize efficient operation of the Chainlink Oracle network. It will also increase node operators’ participation in the Chainlink network and their ability to collect payments.
Participants in this system use LINK tokens as collateral. If a node misreports data, those collateral tokens can be taxed or “retained.” LINK tokens taxed by dishonest auditors are transferred as revenue to honest auditors.
Chainlink’s architects believe that implementing this cryptoeconomic security would make an attack on the network’s price oracle more expensive than the potential profit an attack could bring. Similar gamification techniques are used by blockchain networks such as Bitcoin and Ethereum.
Similarly, LINK holders who do not manage their own nodes can get their share by transferring their tokens to a trusted node operator. Chainlink’s creators expect the staking program to initially yield a 5% return on investment through a combination of treasury issuance and fees paid by users of Chainlink data streams, and eventually to rely entirely on network fees.
Involving community members in betting is another reason for node operators to maintain their integrity. Participants can decide where to move their assets by awarding reputation points to node operators that consistently deliver accurate data streams.
Chainlink Management 2.0
Version 0.1 of LINK Staking is expected to be released before the end of 2022. The timing of the release of version 1.0 and the full version 2.0 will depend on the success of this release.
With the launch of LINK Staking, the era of Chainlink 2.0 has officially begun. Chainlink co-founder Sergey Nazarov believes that this era will herald the inevitable transition to cryptographically secure technologies.
“A society based on cryptographic promises should have a cryptographic reality system that shows what’s going on, whether it’s random numbers, market data, weather events, or the mathematical calculations required for a trust-minimized application. That’s the world we’re aiming for.”
Pros and Cons of Chainlink
Pros:
- Chainlink’s strength lies in its partnerships with major companies, such as Google Cloud and other blockchain companies.
- The oracles on the Chainlink network allow for the connection of different blockchains and external data sources.
- The Chainlink platform provides easy access to any API, allowing for integration with real-world data and seamless connectivity.
Cons:
- It has been reported that around 60% of the Chainlink supply is controlled by the parent company.
- The number of Oracles on the Chainlink network is limited, with only around 250 active on the platform currently.
Chainlink is vital in the creation of Smart Contracts and provides a highly valuable service of decentralized Oracles, which has wide-ranging uses across various industries. According to a top blockchain developer at Rejolut, Chainlink is a trustworthy option for developing sophisticated Smart Contracts with security and dependability, be it for gaming, cryptocurrency or other sectors. Its capacity to establish secure communication between Smart Contracts and outside data systems positions it as a key player for the future.
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