Hey guys :) I’m back with another in-depth piece just like my recent Tron (TRX) and Binance and BNB articles, but this time it’s about Chainlink (LINK)!
Chainlink (LINK) is a project that I believe to be one of the most important for the adoption and utility of smart contracts and blockchain technology. That being said, I hope you enjoy reading it as much as I enjoyed writing it!
The list of Q&A is pretty long so first comes the list of questions that I have prepared the answers to:
- What is Chainlink?
- How many Chainlink (LINK) tokens are out there?
- Who and when Created Chainlink?
- What Chainlink aims to achieve?
- What Are Chainlink’s Oracles and how do they work?
- What is the purpose of Chainlink’s (LINK) token?
- Where to buy Chainlink LINK?
- Where to store Chainlink?
- Is Chainlink an ERC-20 token?
- What is a Chainlink node?
- Does Chainlink have an Explorer?
- What is a Chainlink adapter?
- Can you stake Chainlink LINK?
- Does Chainlink have its own Hackathons?
- What are the most important Chainlink partnerships?
1. What is Chainlink?
Chainlink website homepage
Chainlink is a decentralized oracle network that allows smart contracts on Ethereum or any blockchain to securely connect to external data sources, APIs, and payment systems.
As described by its developers, Chainlink is a secure blockchain middleware that provides reliable tamper-proof inputs and outputs for complex smart contracts on any blockchain.
In other words, the Chainlink network acts as a secure tamper-proof bridge between smart contracts on the blockchain and real-world applications residing off the blockchain.
Connect to any external API and send payment anywhere
Why is this important?
Chainlink’s decentralized oracle network is extremely important for the adoption and usage of blockchain technology because it is the link between old legacy systems and new distributed ledger technology (DLT).
Most of the world’s data exist outside of the blockchain and Chainlink securely brings this data on to the blockchain through the use of APIs so that it can be used in smart contracts. Chainlink’s decentralized network of oracle nodes retrieves data from multiple off-chain API data feeds and formats this data into blockchain readable formats.
Therefore, with Chainlink, all of the important benefits of smart contracts such as trustlessness, decentralization, and having no middleman, are maintained. Without decentralized and trustless oracle data feeds, all of the benefits of smart contracts would be lost.
This is why a decentralized oracle network like Chainlink is very important because, without secure and trusted data, many smart contracts are essentially useless.
Secure Chainlink Inputs and Outputs
In addition to providing reliable connections to external data that is provably secure end-to-end, Chainlink can also offer smart contract platforms increased scalability and privacy solutions by utilizing Trusted Execution Environments (TEEs).
TEEs provide off-chain computation for smart contracts which takes much-needed pressure off of smart contract platforms. As well, TEEs speed up processing, provide privacy of data, and keep the smart contract platform’s main chain fully decentralized.
These blockchain innovations are made possible through Chainlink’s reliable and provably secure connectivity.
2. How many Chainlink (LINK) tokens are out there?
The total Chainlink (LINK) token supply is 1,000,000,000 LINK (1 billion LINK) and the circulating supply is 350,000,000 LINK (350 million LINK) as of 2020.
The Chainlink (LINK) cryptocurrency is an ERC-20 token on the Ethereum network that was launched in an initial coin offering (ICO) crowd sale in September 2017.
Chainlink (LINK) Distribution
During the ICO, 350 million LINK tokens (35 percent of the total supply) were sold and distributed to retail participants. Additionally, another 350 million LINK tokens are reserved for and being distributed, to node operators to incentivize the ecosystem.
As for the remaining, 300 million LINK tokens (30 percent of the total supply) are held by the company for further development.
3. Who and when Created Chainlink?
Sergey Nazarov, Creator of Chainlink
Chainlink was created and developed by a company called SmartContract, which was founded in September 2014 by its CEO Sergey Nazarov and CTO Steve Ellis.
Prior to founding SmartContract, Sergey Nazarov took an interest in cryptocurrency and distributed ledger technology when he entered the crypto world in 2011. He then founded Secure Asset Exchange (an exchange network) and CryptoMail (a decentralized email service).
Therefore, Sergey – Chainlink’s creator – had a profound interest in crypto and blockchain technology long before it became popular.
He foresaw that smart contract platforms and smart contracts would be an integral use case for blockchain technology which is why he founded SmartContract a full year before Ethereum, the world’s first smart contract platform even launched.
That being said, Sergey began working on Chainlink for at least 3 full years before the Chainlink (LINK) cryptocurrency was launched through its ICO in September 2017.
This made Chainlink very different from most other ICO’s, as, during this time, everyone and their cousin were launching ICOs to raise millions of dollars. Legitimate, well-thought-out projects were few and far between but Chainlink was one of them.
Then, 2 years after the Chainlink (LINK) token launch, the Chainlink mainnet finally went live on the Ethereum network on May 30, 2019.
No shortcuts were taken in the development of Chainlink and an immense amount of effort went into building something that solves the “oracle problem”. With that said, the Chainlink project is just getting started in terms of implementation.
4. What Chainlink aims to achieve?
Chainlink is the middleware that connects data from the real-world to smart contracts on the blockchain
Chainlink is blockchain middleware that aims to build bridges (chainlinks) betweens smart contracts residing on the blockchain and data in the outside world.
Smart contracts are poised to revolutionize many industries by replacing the need for both traditional legal agreements and centrally automated digital agreements.
Unfortunately, the decentralized nature of smart contracts that makes them tamper-proof also removes their ability to communicate with external systems and access key contractual data.
Smart contracts can not natively access key off-chain resources like data feeds, various web APIs, and traditional bank account payments. In order to access these off-chain resources, an oracle is needed to connect them through inputs and outputs.
The industry already has centralized oracle solutions that can bring key contractual data onto the blockchain, but in order to maintain the decentralized tamper-proof nature of smart contracts, there cannot be any single points of failure.
This is where centralized oracle solutions fail and where Chainlink aims to succeed.
The aim of Chainlink is to provide a secure, decentralized, and tamper-proof way to feed external events/data into smart contracts so that they can actually be useful.
Additionally, it aims to do this in a simplified way that can accelerate the development of useful smart contracts on any blockchain. Chainlink aims to create an incredibly large decentralized oracle network (like a marketplace) that any blockchain can use.
Therefore, Chainlink’s decentralized oracle solution is blockchain agnostic, meaning any blockchain, whether it's Ethereum, Bitcoin, EOS, or others can utilize Chainlink oracles.
All in all, a decentralized oracle solution is of the utmost importance for the adoption and utility of smart contracts and blockchain technology.
That is why Chainlink aims to become the standard decentralized oracle solution in which every blockchain relies on for reliable tamper-proof inputs and outputs for complex smart contracts.
5. What are Chainlink Oracles and how do they work?
Chainlink oracles act as a bridge between two environments, on-chain and off-chain.
With Chainlink oracles, blockchains like Ethereum, Bitcoin, Hyperledger, and others can connect to off-chain resources such as market data, bank payments, retail payments, backend systems, events data, other blockchains, and more via web APIs.
A highly reliable decentralized oracle network
Through this bridge, Chainlink oracles retrieve, query, and verify external data so that it can be used to trigger smart contracts residing on the blockchain.
The data Chainlink oracles might obtain for smart contracts can come from the following sources:
- IOT data
- E-signatures
- Web APIs
- Existing backend systems
- Other smart contracts
- Satellite imagery
- Software applications
By obtaining data from the above sources, Chainlink oracles perform two functions:
- Connect smart contracts to off-chain inputs (data)
- Allow smart contracts to produce off-chain outputs (payments, transfer of ownership, transfer of data)
Chainlink oracles connect real-world data to blockchains
Overall, Chainlink oracles bring a whole new level of connectivity and functionality to smart contracts.
A good analogy to understanding how important Chainlink oracles are too smart contracts is to think of how important the internet is to a computer. A computer with no internet has limited capabilities and so do smart contracts without connection to real-world data.
Therefore, Chainlink oracles are like the Internet for smart contracts, they allow connectivity between almost everything.
6. What is the purpose of Chainlink’s (LINK) token?
Chainlink logo
Chainlink’s LINK token is the cryptocurrency underpinning the decentralized Chainlink network and has very strong tokenomics (token economics) as a result.
Chainlink’s (LINK) token is used for:
- Paying Chainlink node operators for their services
- Incentivizing uptime guarantees by acting as collateral insurance on smart contracts
- Trading on the cryptocurrency market
Paying Node Operators
Chainlink node operators are incentivized to run and maintain the Chainlink network by offering Chainlink services and receiving LINK tokens as payment.
Chainlink node operator services include the retrieval of data from off-chain data feeds, the formatting of data into blockchain readable formats, and off-chain computation.
The prices for these services are set by the node operators and are subject to the market. As well, prices may vary depending on the complexity of requirements from the contracts.
Clients requiring Chainlink’s services can browse for node operators on the Chainlink Marketplace. Via the marketplace, clients can pay for Chainlink node services with fiat currencies, while the payment in LINK to node operators happens in the background.
Acting as Collateral Insurance on Smart Contracts
When a smart contract creator requires Chainlink’s decentralized oracle services, they can choose how much collateral (LINK) they want the node to stake to receive their contract.
This staked LINK collateral acts as both a penalty payment and insurance on the contract in the event that the node acts maliciously or has inconsistent data compared with other oracle nodes working on the smart contract.
A highly important/high-value contract will likely want larger amounts of collateral staked to ensure the node operates with the highest of standards. If the node operator fails to service the contract with good data, they will lose their LINK collateral.
Trading on the Cryptocurrency Market
Apart from LINK’s primary use cases within the Chainlink network, the token can also be traded on the 24/7 cryptocurrency market.
Popular LINK trading pairs include Bitcoin (BTC), Ethereum (ETH), Tether (USDT), as well as other stablecoins and fiat currencies.
LINK has a healthy trading market as it is consistently ranked among the top 20 cryptocurrencies by market cap and is a highly liquid trading pair.
7. Where to buy Chainlink LINK?
You can buy Chainlink on Binance
The Chainlink (LINK) cryptocurrency is one of the most popular and highly traded cryptocurrencies on the market. Therefore, LINK can be bought at a variety of exchanges for either fiat currency or cryptocurrency.
Typically though, for the majority of exchanges, you will have to fund your account with fiat, buy BTC or ETH, and then buy LINK.
See below, a list of the top exchanges to buy LINK:
- Binance
- Coinbase
- Huobi
- Gate.io
- OKEx
- Merkatox
- Kraken
- HitBTC
- Bibox
- Bitmart
- CoinEx
- Bithumb
- Bittrex
Keep in mind, the cryptocurrency exchanges listed above are some of the best exchanges to buy LINK, but if you go to CoinMarketCap and look under LINK market pairs, many other exchanges will pop up first.
However, these other exchanges showing greater trading volumes are not necessarily better than the ones listed here. Some of them are known to participate in wash trading to inflate their trading volume.
8. Where to store Chainlink?
MyEtherWallet (MEW) website homepage
Chainlink (LINK) is a cryptocurrency based on Ethereum’s ERC-20 token standard and will remain this way for the foreseeable future. Therefore, you can store your Chainlink (LINK) tokens just like any other ERC-20 token on a wide variety of reputable Ethereum wallets.
Here are the 5 best Chainlink (LINK) cryptocurrency wallets:
- MyEtherWallet (MEW)
- MyCrypto (Web Wallet)
- Ledger Nano S (Hardware Wallet)
- MetaMask (Web Wallet)
- Atomic (Desktop Wallet)
Apart from the above-listed wallets, Chainlink (LINK) holders have a wide variety of other reputable ERC-20 cryptocurrency wallets to choose from including:
- Trezor
- Keepkey
- Coinomi
- Trust Wallet
- Lumi Wallet
- Coinbase Wallet
- Parity
- Mist
- Guarda Wallet
- Eidoo
- Enjin Wallet
- imToken Wallet
- Exodus
- Jaxx
- Bread Wallet
9. Is Chainlink an ERC-20 Token?
Chainlink’s LINK token is an ERC-677 token that inherits the functionality from Ethereum’s ERC-20 token standard, is backward compatible with ERC-20, and also allows token transfers to contain a data payload.
Data payload is necessary for Chainlink’s LINK token because these tokens are transferred to contracts and must contain trigger logic for how to respond to receiving the tokens within a single transaction.
According to the Chainlink Docs, the Chainlink network’s mainnet will operate on top of the Ethereum mainnet and LINK tokens will remain on the ERC-20 token standard.
However, as additional smart contract platforms gain native support by the Chainlink network, LINK tokens will be transferable to those blockchains.
10. What is a Chainlink node?
The Chainlink node is middleware, operating between the blockchain and external data
Chainlink nodes are oracles that allow smart contracts residing on the blockchain to interact with external APIs. Anyone can set up a Chainlink node and run it on a test network or the Ethereum mainnet to earn LINK for their services.
If you set up and run a Chainlink node, you will be able to participate in fulfilling service agreement requests on the Chainlink marketplace.
Such requests might include oracle services, where a Chainlink node connects a smart contract with off-chain data. Another request could be to perform off-chain computation in a trusted execution environment (TEE).
As of February 2020, there are not a whole lot of smart contract job requests for Chainlink node operators to undertake but as the use of smart contracts gains adoption, it’s expected that the Chainlink marketplace will have lots of work.
Running a Chainlink Node
To set up a Chainlink node, there is zero LINK required. However, you will not be able to participate in job requests without staking (depositing) an amount of LINK as a penalty fee/insurance in case the node doesn’t fulfill the request. However, some jobs will not require staked LINK since penalty fees are optional.
As for the hardware requirements for operating a Chainlink node, they are very minimal so that many people can participate in the Chainlink network. Chainlink nodes should run with at least 1 core and 1 GB of RAM, though you may want to run it with 2 GB RAM for better reliability.
Additionally, you will have to connect with an Ethereum client when running your own Chainlink node. You can decide to run your own Ethereum client which requires more hardware, or you can connect to someone else’s.
Overall, Chainlink node operators play a key role in Chainlink’s decentralized oracle network and a lot of responsibility is placed on them to provide good data. If they fail to provide good data, their staked/deposited LINK can be taken away and their reputation will be damaged for future jobs.
11. Does Chainlink have an Explorer?
Since Chainlink (LINK) is an ERC-677 token based on the ERC-20 token standard, you can use any Ethereum blockchain explorer to view various Chainlink statistics.
The most popular Ethereum blockchain explorer you can use to search for Chainlink data is Etherscan.io.
Etherscan website homepage
This block explorer enables you to see the following information on Chainlink:
- Chainlink Overview:
- Total Supply
- Holders
- Transfers
- Profile Summary:
- Contract
- Decimals
- Official Site
- Social Profiles
Additionally, users can view detailed blockchain information and statistics in the following tabs:
- Transfers
- Holders
- Info
- Exchange
- DEX Trades
- Read Contract
- White Contract
- Analytics
- Comments
Moreover, Chainlink also has 2 other types of explorers, the Chainlink Marketplace and Chainlink Explorer, both of which allow you to explore the Chainlink market.
Chainlink Market website homepage
Chainlink Explorer website homepage
These explorers allow you to search for:
- Job IDs
- Run IDs
- Transaction Hashes
- Requesting Contracts
- Chainlink Nodes
- Chainlink Adapters
- Data Sources
Additionally, Chainlink has another explorer worth mentioning, Chainlinkadapters.com, which is used to browse through the largest collection of external adapters for Chainlink nodes.
Chainlink Adapters website homepage
12. What is a Chainlink adapter?
Chainlink adapters are the connection between data and networks
Chainlink adapters are external adapters, which can be built by anyone, for any system, and written in any programming language so that Chainlink can connect to different networks through the use of APIs.
In other words, these external adapters make Chainlink blockchain agnostic, meaning Chainlink can be used on any blockchain (public, permissioned, or private) and be connected to any external system with access to the API.
Connecting Resources, Data, Smart Contracts, and Chainlink
The high level of connectivity that Chainlink adapters enable allows smart contracts to access a variety of resources that were previously out of their reach.
Such resources include smart contracts in fiat currencies, smart contracts on credit cards, and smart contracts based on any piece of data that exists. It enables smart contracts to make payments on any blockchain or backend system with an API.
13. Can you stake Chainlink LINK?
Linkpool Staking Dashboard
Chainlink node operators are usually required to deposit/stake some LINK tokens to act as a penalty fee/insurance in case the node fails to fulfill the request.
Therefore, users running a Chainlink node can stake their LINK tokens to fulfill job requests submitted by contract creators and receive rewards paid in LINK for doing so.
What about regular Chainlink (LINK) holders/investors? Can they stake LINK tokens?
Yes, investors and holders of LINK tokens can stake their LINK through Chainlink node service providers that provide staking services to benefit the Chainlink ecosystem.
One such service provider is LinkPool, a leading Chainlink node service provider that provides various tools and services including:
- Staking on Chainlink nodes
- Running a Chainlink node
- Providing smart contract creators with the tools to search and identify Chainlink nodes that can suit their data requirements
LinkPool Staking
LinkPool has developed an intuitive decentralized application (dapp) that allows users to easily stake their LINK tokens onto LinkPool’s professionally maintained Chainlink nodes.
The way it works is, an Ethereum smart contract acts as a Chainlink node’s wallet address and users can stake their tokens to this address and always maintain control of your tokens as you can withdraw them at any time.
It’s an easy to use staking solution that was designed for users who don’t feel technical enough to run their own node but still want to contribute to the betterment of the Chainlink ecosystem and receive Chainlink node rewards.
Apart from staking LINK with LinkPool, in the near future users will be able to stake LINK with a number of other Chainlink node service providers, one being Coinbase. Coinbase already supports staking for Tezos (XTZ) and will likely support Chainlink staking in the future.
14. Does Chainlink have its own Hackathons?
Many cryptocurrency and blockchain projects host hackathons, which are sprint-like events in which computer programmers and others involved in software development collaborate intensively on software projects.
The goal of a hackathon is to create or improve upon functioning hardware or software by the end of the event.
Overall, hackathons are excellent opportunities to learn about new software and hardware, collaborate ideas, discover bugs, and maximize the success of projects.
Chainlink Virtual Hackathon
Chainlink hosted its first virtual hackathon from October 14 - October 31, 2019, and invited anyone from around the world to participate in the development of the Chainlink ecosystem.
The Chainlink hackathon provided a launchpad opportunity for developers creating useful smart contract dapps and an opportunity for people to learn about Chainlink’s growing ecosystem of platforms, data providers, and oracles.
Participants were provided with direct access to team members, mentors, educational materials, and live workshops showcasing how to use Chainlink.
As well, participants got the opportunity to compete for cash prizes for building innovative projects with Chainlink.
The winning Chainlink projects were:
First Place (15,000 USD equivalent worth of LINK)
- LinkPal: Peer-to-Peer Ethereum to fiat decentralized escrow via PayPal.
Second Place (8,000 USD equivalent worth of LINK)
- Cerebus Wallet: Two-factor authorization for crypto transactions using phone push notifications.
Third Place (5,000 USD equivalent worth of LINK)
- Flyt: Flight insurance where you can pay the insurance premium with crypto.
Most Innovative (10,000 USD equivalent worth of LINK)
- Link Total Return Swap: A Defi platform which enables Chainlink Node Operators to hedge against LINK price volatility
15. What are the most important Chainlink partnerships?
Despite being in development for 5+ years, the Chainlink project is still very much in its early days and its full potential has yet to be realized.
That being said, many people and companies see Chainlink’s potential which is why the project has some of the most fundamentally solid partnerships in the blockchain space.
For instance, Chainlink has partnered with companies like Google Cloud, Docusign, Accord, Openlaw, Web3, ZepplinOS, and many more organizations that will play an integral role in the usage and adoption of smart contracts.
Also, in most of these aforementioned partnerships, it's likely that they build Chainlink right into their underlying protocols, which would give Chainlink access to an extremely large customer base.
See Chainlink’s notable partnerships below:
- Google Cloud (Source)
- Docusign (Unofficial) (Source)
- Oracle (Source)
- OpenLaw (Source)
- SWIFT (Unofficial) (Source)
- Web3 / Polkadot (Source)
- Zeeplin OS (Source)
- Town Crier (Acquired by Chainlink) (Source)
- Kaleido (Source)
- Accord Project (Source)
- Matic (Source)
- Hydrogen (Source)
- Credits (Source)
- V SYSTEMS (Source)
- Dapps Inc (Source)
- GoChain (Source)
- Reserve (Source)
- Harmony (Source)
- Shyft (Source)
- XYO (Source)
- Hedera Hashgraph (Source)
- IOST (Source)
- Streamr (Source)
- Ocean Protocol (Source)
- Data Sports Groups (Source)
- Synthetix (Source)
- Provable (Oracalize) (Source)
- Celer (Source)
- Bodhi and Naka Chain (Source)
- Katallosses (Source)
- STK (Source)
- Mobilum (Source)
- ETHA (Source)
- Olympus Labs (Source)
- RTrade Technologies Ltd (Source)
- Kaiko (Source)
- Wanchain (Source)
- bZx (Source)
- Morpheus.Network (Source)
- BraveNewCoin (Source)
- GameDex (Source)
- MARKET Protocol (Source)
- ClinTex (Source)
- Factom (Source)
As you can see from the long list above, Chainlink has many notable partnerships and they are continuously making more.
Hope you enjoyed that read :) Let me know if I have missed something in the comments.
