Neosify - Buy, Stake & Earn Crypto
Neosify - Buy, Stake & Earn Crypto
Neosify - Buy, Stake & Earn Crypto

What's an Chainlink ?

By yanis | little crypto guides | 1 Feb 2021

ChainLink (LINK) is an oracle system, but almost no one knows the system behind Oracles and their economic models. So I hope this post will help understanding their utility and the reasons of LINK pump !

disclaimer : it isn't an investment advise, do your own researches before investing in LINK !


A problem with EVM blockchains...

The big problem of EVM blockchains is that we CANNOT directly access data from outside of the blockchain. So it prevents from directly using http (prices, blockchain explorer) APIs.


... and oracles are the solution

Oracles allow smart contracts to use data from outside of the blockchain. So, if a smart contract developper wants to get data (for example, weather) from an API, he'll be able to call the oracle, and ask it to make the network request.


What's the process behind ?

Oracle calling is made of 3 steps :

1 - The contract calls the oracle contract

2 - Oracle contract tells a server to make the request

3 - Server sends back data to blockchain


Centralized / Decentralized Oracles, what's the difference ?

1st oracles were centralized, so company maintaining them was able to cheat by editing the results (for getting better prices, for example). Because of it was very insecure, decentralized oracles were invented for fixing that. 

ChainLink uses multiple servers, maintained by different persons, and stores almost any data on-chain, so data are verifiable, and cryptograpically verified. It makes an attack very hard to do !


An economic model

Each chainlink call involves paying some LINK tokens, so a grow of the DeFi would lead to a grow of LINK price (and volume) because of tokens doesn't fall from the sky.

So LINK is an utility token (token used for a specific purpose) ! 

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A crypto freak, and also a miner. The picture is a real code !

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