Chainlink and the Oracles: How They Work?

Chainlink and the Oracles: How They Work?


The Chainlink project was born in 2014. It is a system called ใ€๐• ๐•ฃ๐•’๐•”๐•๐•–ใ€‘ that can be interfaced with all blockchains and DeFi.
Smart contracts offer the ability to make digital agreements securely. However, for a smart contract to be reliable, the data must be secure and guaranteed against tampering. Chainlink solves the so-called "Oracle problem" and provides a reliable and secure end-to-end connection to external data for any blockchain.
Although LINK is an Ethereum-based token, it is essentially used only to pay the operators of the nodes to ensure the reliability of the data.
The Chainlink Oracle can be integrated into any platform by adding an external plug-in to the interface so that Chainlink data can be recovered. This method can also be implemented on Hedera Hashgraph, IOTA and Zilliqa.
Chainlink guarantees decentralization thanks to the network of oracles managed by different node operators, who are encouraged to provide adequate data, selected from different sources to guarantee maximum reliability. Chainlink nodes are chosen based on their reputation, providing additional security to the system.

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PRIVACY
One of the biggest limitations to the adoption of DeFi by large companies is the lack of privacy. All operations are publicly visible and this severely limits their use for business applications. In fact, companies must keep their strategies and commercial positions private, not only for strategic issues but also for legal issues, for example, to avoid the practice of front running.
โ„‚๐•™๐•’๐•š๐•Ÿ๐•๐•š๐•Ÿ๐•œ'๐•ค ๐•„๐•š๐•ฉ๐•š๐•”๐•๐•–๐•ค combines the concept of a decentralized oracle with that of a mixer. The data is mixed in such a way that some privacy is guaranteed.
To do this, Mixicles redefines smart contracts by dividing them into two parts, "chain and chain", which have no connection with each other.
Mixicles can therefore provide confidentiality in payments, hiding the identities of the recipients using pseudonyms to indicate the addresses on the blockchain. Instead of using traditional mixers, this system makes pools more suitable for the use of derivatives and binary options.
This system also promotes anonymization of the oracle, which makes Chainlink's network even more resistant to attack. It becomes impossible for any attacker to find out which smart contract is the most profitable or which node to attack to manipulate data. To bribe an oracle would be less than profit.
Like all mixers, Mixicles works best when multiple users are involved in a mix. At the same time, Mixicles undertakes to comply with current anti-money laundering and anti-terrorism regulations, making reports on oracles verifiable by third parties. In practice, Chainlink would allow authorities to monitor transactions in certain circumstances by divulging the content of its smart contracts.

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EXAMPLE
If we block Ether (or BAT) in a smart contract to get DAI (which could be used to make a purchase on eBay, without using Ether that we could keep to speculate because of their volatility), in the future we will have to pay our debt for get back the blocked sum (Ether or BAT).
How? Buying the DAI that has been lent to us. Let's assume that I need โ‚ฌ 400 (I will receive 2/3 of the collateral so I have to block 600 โ‚ฌ).

600 โ‚ฌ (blocked in smart contract)= ๐Ÿ…ด๐Ÿ†ƒ๐Ÿ…ท๐Ÿ…ด๐Ÿ† (or ๐”น๐”ธ๐•‹) --> collateral
400 โ‚ฌ (loaned)= ใ€Dใ€‘ใ€Aใ€‘ใ€Iใ€‘--> 150% of the collateral

In the future I buy 400 โ‚ฌ of DAI and get back the collateral.
But what if the blocked Ether (or BAT) lose value? Obviously there is a "liquidation time" dependent on the market value of the collateral (if Ether drops in value quickly you are liquidated and you no longer receive Ether back). The system to decide whether or not to liquidate the Ether must therefore have a reference value. Oracles? Exact.
Chainlink represents the best-known decentralized oracle.

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