What is Chainlink (LINK)?

What is Chainlink (LINK)?

By nervi | Crypto Journalism | 26 Mar 2021

Chainlink has very quickly gained popularity as a project used in the cryptocurrency space. It is a service that provides data to smart contracts in Ethereum. You could say it is the middleman between the blockchain and the world. Most of you know what smart contracts are so we'll cut to the chase. Due to the fact that blockchain as such has a relatively difficult access to take data from the outside then Chainlink tries to solve this problem.

It works in such a way that the system translates external data into the language that smart contracts support. It also works the other way round. This blockchain-based decentralised Oracle network allows information to be linked to the blockchain. This can be APIs, some systems or data types. The token is LINK and it is an ERC-20 token and it uses a network of nodes in such a way that as much data as possible that is delivered to smart contracts is reliable. Chainlink then verifies this data from multiple sources and so guesses which are trustworthy. This increases protection against attacks.

With the popularity of DeFi, Chainlink has come in very handy. Flash loans are a big threat to DeFi and Chainlink prevents this. The LINK token alone has as many as 1 billion supply tokens. 35% of these were sold during the ICO four years ago in 2017, with an estimated 300 million LINKs in the team's portfolios. Don't be alarmed by the fact that LINK is a token on Ethereum, as popular wallets will support the ERC-20 format so LINK too.

LINK is a way to exchange data between the outside world and the blockchain. Payouts to nodes are paid out in LINK form. And more LINK means access to bigger data contracts.

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