- Chainlink is the brainchild of Sergey Nazarov (CEO) and Steve Ellis (CTO)
- Use cases include price feeds for securities, insurance, and trade finance smart contracts.
- Chainlink aims to connect public blockchains with the data which exists outside the blockchain
Chainlink connects smart contracts to the real world. Using secure oracles, Chainlink extends the functionality of blockchains by connecting contracts to real-world data such as asset prices, weather, sports, and much more.
A difference in consensus mechanisms between blockchains makes it difficult for cross-chain interaction. Chainlink solves this problem by creating a fully decentralized solution through a secure, tamper-resistant oracle network.
Chainlink’s parent company, SmartContract Ltd, launched in September of 2014. The company was created to develop a bridge between external applications and public blockchains. The team at SmartContract Ltd. eventually developed Chainlink, a product that could connect smart contracts to data feeds from any web API and data source.
The Brain Behind the Chainlink
Sergey Nazarov and Steve Ellis are the founders of SmartContract Ltd which led to the birth of Chainlink.
Sergey Nazarov has been in the cryptocurrency industry since 2011 and is considered one of the leading experts in the industry. He is the current CEO of SmartContract Ltd. Steve Ellis currently leads SmartContract Ltd. as its CTO.
Chainlink gained popularity in October 2017 during its ICO, however, it had been in development for a long time prior. During the ICO, Chainlink raised $32 million and also released a whitepaper.
How Does Chainlink Function?
Chainlink uses decentralized oracle networks made up of tamper and manipulation-resistant nodes. Every piece of data is digitally signed by the nodes and stored on-chain.
On-chain and off-chain components form the bulk of the Chainlink ecosystem. Smart contracts in Chainlink can integrate non-blockchain applications as well. An on-chain component of Chainlink helps in the selection of an Oracle and the creation of an Oracle record.
Once the Oracle is created, the agreement can be reported to the on-chain infrastructure only after it is executed off-chain. The off-chain component is aided by the Chainlink Core along with the subtask schemes and external adaptors, which are equipped within the off-chain architecture itself.
Currently, Chainlink is built on the Ethereum network. Chainlink plans to update to being blockchain agnostic, meaning that cross-chain transactions would be possible.
Major Use Cases
As per the Chainlink whitepaper, the most prominent applications of Chainlink are in Securities smart contracts, Insurance smart contracts, and Trade finance smart contracts.
#1. Securities Smart Contracts
The bonds and smart contracts are based on interest rate derivatives. Securities smart contracts are a perfect fit for the implementation of Chainlink as they depend on different financial websites and APIs to report data about market prices and more.
#2. Insurance smart contracts
Smart contracts will be a game-changer for the insurance industry. Real-world data feeds adds another layer of superiority to insurance smart contracts. These smart contracts can define the insurable event and decide if payments are to be disbursed to the insured individual or organization.
#3. Trade finance smart contracts
The trade finance smart contracts can be powered by Chainlink, feeding data to the smart contract through ERP systems or GPS, making it possible to confirm if the contractual obligations were fulfilled or not.
The Road Ahead
Chainlink is aiming for widespread adoption and use-cases for its oracle system. They have proved their mettle to the wide blockchain community by signing many high-profile partnerships and increasing their foothold as a major dataset player in DeFi.
Chainlink’s growth will depend on its ability to continually prove its worth to projects and companies in the DeFi space. Secure, reliable, manipulation-resistant datasets and price feeds are critical to the execution of smart contracts, and with Chainlink’s growing oracle network, DeFi becomes a safer space for users and developers alike and helps to usher in mainstream adoption.