Chainlink crypto: What is it and understanding the token link

Chainlink is one of the most ambitious projects in the crypto universe. It is even one of the oldest that seeks to offer an oracle service. For your information, we call them oracles to refer to the oracles of Ancient Greece, which provided divinatory predictions... Like the oracle of Delphi, for example, oracles on the blockchain are there to give us essential information.

Chainlink is a decentralized oracle network, which aims to connect smart contracts with real-world information. Developed by Sergey Nazarov and Steve Ellis, who later became notorious figures in the crypto-sphere.

With an ever-increasing market capitalization, we will see here what it is in concrete terms.

THEICO Chainlink took place in 2017 and at the time, $32 million was raised by the company with 35% of LINK tokens sold to the public.

Some people notably criticized the fact that only 35% of the tokens were sold, the rest being intended for the founders and the development of the project. Even despite the criticism, this did not prevent the Chainlink project from growing ever bigger.

Let's also say that Chainlink is valuable (at least in its objective) for the proper functioning of the blockchain.

History of Chainlink:

You should know that the appearance of Ethereum on the crypto scene has considerably changed the way we envisioned the use of blockchain. Smart contracts then became, via Ethereum, concrete solutions for creating decentralized applications.

That said, even though smart contracts are clever in theory and great in terms of execution, there are still internal problems. In fact, smart contracts can only manage information that is available on the blockchain on which they will operate. They cannot, therefore, by definition, have access to external information such as knowing if a particular event has occurred, if a climatic event or if a law has just appeared for example, and which may have an impact on execution of the program.

It is to solve this type of problem that we talk about an oracle. Chainlink has therefore shown itself to be very ingenious in offering smart contracts the ability to use oracle networks in order to obtain crucial information (off-chain), which comes from outside.

Thus, Chainlink therefore proposes to bring together and connect on-chain data (what is present on the blockchain) and off-chain data (those which are external to the blockchain).

Thus, to function, Chainlink is made up of two very distinct and complementary infrastructures: on-chain and one off-chain.

Let's see this in detail.

**How the functions work On-chain et Off-chain of ChainLink?**

First, let's see the on-chain function.

The On-Chain component of Chainlink is carried out by a smart contract deployed on the Ethereum network. This is more precisely called an “oracle contract” which takes care of processing requests from users who want to obtain off-chain information.

The first component of ChainLink is on-chain and consists of a smart contract deployed on the blockchain Ethereum. This is a " oracle contract", or oracle contract, which will process requests from users who wish to obtain information off-chain. When a user wants to obtain information off-chain, it will submit a request to the ChainLink network via a “ user contract", or user contract, and the blockchain will process this request through its own " oracle contract"

To go into more detail, there are even 3 different types of contracts on Chainlink; These 3 contracts therefore constitute the on-chain function of Chainlink.

Reputation Contract: The contract here will validate that the oracle supplier is reliable and therefore has a good reputation.
Aggregation contract: The contract will here analyze the information obtained from the different oracles to select the most relevant information.
Order-matching contract: The contract will define a price that will correspond to the user and the supplier so that the information is transmitted.

Thus, in its on-chain function, Chainlink will then be able to follow its process from the selection of the right oracle to the transmission of information.

Now let's see the off-chain function.

The off-chain function consists of “oracle modes” which are connected to the Ethereum network mainly.

The nodes work by collecting information from an off-chain source. Subsequently, the nodes will process the information on the Chainlink core, the central node which will make the link between on- and off-chain data.

What is the Link token?

The LINK cryptocurrency is used to mainly pay node operators. Those who provide modes and have large amounts of LINK can then receive larger contracts as rewards.

The LINK token is an ERC-20 token and even has additional ERC223 functionality.

We see that the token has experienced a strong surge since July 2020…

The token also serves as a financial incentive for each party to work properly.

Final word on Chainlink

Here in this article, we have broadly explained what Chainlink is without going into too much detail. The most important thing is to understand through Chainlink the usefulness of oracles in reality.

Chailink goes even further by seeking to make them ever more reliable.

The advantages of Chainlink are numerous because the project is ambitious in that it wants to facilitate the acquisition of off-chain information in an efficient and reliable manner. We can also select the parameters of our choice to choose the oracles. There is a well thought out system regarding oracle reputation with a financial incentive and penalties for faulty oracles. This ensures that oracles always provide more accurate and reliable information.

As for the company and the founders of the project, everything seems serious and since the ICO in 2017, we can say that they have kept their promise. They were able to make regular and continuous improvements.

Now, very relevant competitors have launched and this can further push Chainlink to do better... Moreover, we have heard that Google is very interested in Chailink in order to possibly use it as a gateway with its cloud service. BigQuery…. A really promising prospect, isn't it?

You can buy and invest Chainlink on almost all sites that allow you to buy cryptocurrencies like Binance or Bitpanda for example.

It has become an essential crypto, in fact.

Learn more about Chainlink on the official website.

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