Chainlink is a decentralized oracle network (DONs) that runs a tunnel to feed real work data into smart contracts. It is one of the most technologically advanced blockchain projects and has increasingly become a more significant part of Decentralized Finance through improving smart contracts to become more dynamic.
Here is a 1 min summary of the article if you want to skip the reading.
What is Chainlink
Created in 2017, Chainlink is a decentralized oracle network (DONs) that provides real-world off-chain data and submits it into smart contracts to improve its functionality. It is a data blockchain to the blockchain. It makes smart contracts smarter. It makes digital agreements dynamic by feeding live data so that smart contracts can continue adopting the real-world data and becomes more relevant to execute.
Why Choose Chainlink
Chainlink is one of the first blockchain applications to integrate off-chain real-world data into smart contracts. Furthermore, it makes smart contract automation feasible. A smart contract is programmed to be a conditional program with sufficient specific conditions to execute.
Goals of Chainlink
Chainlink provides a way to improve smart contracts by feeding off-chain data to improve the smart contracts. It creates a path to communicate with smart contracts to improve the execution. It makes smart contracts more connected to the real world. It becomes a bridge between the internet of things, big data, and blockchain. It becomes a validator of billions of dollars in transaction value worth of data and is facilitated into the blockchain.
Chainlink Focus on Data
Chainlink automates the transfer of data between blockchains and off-chain systems. Their data focus is similar to Google as a provider to the blockchain system. They focus on data quality and enable smart contracts to remove any centralized point of failure. The Oracle networks are collaborative networks run by multiple nodes to reduce the chance of a single failure. They provide high-quality data to improve smart contracts.
Holders From Chainlink
Holders are not equally distributed among different users. However, since Chainlink is heavily technological dependable, node operators have the largest stack of tokens. The second-largest holders are Chainlink developers. As a result, they heavily controlled the tokens. Both node operators and developers held over 50% of the token supply, making Chainlink a centralized influence by their operators and developers.
Risks With Chainlink
Even though Chainlink tries to resolve a single point of failure on the smart contracts, their token supply is largely controlled by node operators and developers which may create a single point of failure on the operational aspect. In addition, there is no third-party security audit from their codes. Although developers are increasingly active in their code development, you aren’t likely to know how code performs and how secure their blockchain is.
In Conclusion
I think Chainlink makes a bridge between off-chain data to blockchain smart contracts. It creates possible ways to improve smart contracts and makes them more dynamic. However, the way Chainlink operates will create a single point of failure in supplying quality data that defeats the purpose of the blockchain.
This article is also published in Cryptologist as parnership publication.
Note: the post was shared on multiple platforms here.
You can refer my previous article lists here and here
Below are my previous Defi articles for references:
-------------------------------------------------------------------------------------
Defi
DeFi Swap: Great Returns come with Great Cost
Defi: A Rainbow 5-Layers Cake
Robot Sucks: How Lousy Jobs AMMs Did to Ruin the DeFi
Defi Winter: What May Come After the Bubble Pops
Defi Winter?! When Stablecoins Become CBDCs
-------------------------------------------------------------------------------------
Defi Manual
Defi Manual: Part 1 - Cefi vs. Defi
Defi Manual: Part 2 - Regulations
Defi Manual: Part 3 - Financial Weapons
Defi Manual: Part 4 - Market Manipulation
Defi Manual: Part 5 - Synergies
-------------------------------------------------------------------------------------
Defi Review
Defi Review #0: Why I Focus on DeFi
Defi Review #1: Uniswap The Market Maker
Defi Review #2: MakerDAO The Collective Wealth
-------------------------------------------------------------------------------------
Disclosure: The article was written by a delusional author who is possibly a nut job without any questions whatsoever about expertise in the subject matters. You should not believe any words this author wrote or you may experience similar symptoms or even possibly become a nut job.
