Before we talk about chain link, let do a recap of what smart contracts. Smart Contracts are agreement written in code that usually on a blockchain and most of the smart contract are written on the ethereum network using solidity. A simple explanation is, if I pay you 20 steem today you will pay me back 1 dogecoin back every day for the next 20 days. The smart contract code can assess to see if both parties have the token and then automate the transaction.
Financial smart contracts is usually complicated. For instance, if you give me $10 of USDT, I will give you $6 for Steem but you we have to pay me 3% monthly interest. A nation can even be rely on smart contract but problem is that smart contract can only check information on the blockchain, this limits them. If we can put real world information into the blockchain and not rely on a single person to hopefully give the blockchain genius data.
Chainlink is a network where data providers (Oracles) given money to provide genuine and reliable information to a blockchain. Chain link is ran by oracle and I will like to give a simple explanation of Oracle for you to have a better understanding of what Chainlink is. An Oracle is a protocol that act as a middle man between the blockchain and the real world, it provide the blockchain with the data of the real world.
Chain link is a decentralized network of oracles that provide the smart contract information of the real world. The chainlink link also deal with trust issues that come with using a centralized data source. The chainlink network acts as an intermediary between the blockchain world and usual administrative structures that move the economies to develop reliable, safe, and transparent processes.
It important to know that chain link work on ethereum and is secured by a proof of stake consensus algorithm.
What we should know is that chain link is replacing many intermediaries. For instance, instead of people going to an agent to show people ten different houses, they could just go a a website like Zillow and move on with the process. What chain link does is to replace the middle man with the use of smart contract.
It is simply through the node operators. The node operator are someone who lock their assets into the chain network to be a reliable source of data and the reason why they lock of asset is that if they discover that that they are no longer truthful, they can take their assets and this makes them to always tell the truth. You might be wondering that why would they want to take this risk? They take this risk to earn money. They paid this node operators money to provide genuine real world information.
When someone want an information of the block chain like the stock price, they will have create a requesting contract. After a requesting contract as being created, the chain link network will list it as an event about to happen. Thereafter, the algorithm will set up a chain link service level agreement, this agreement will allow it to get information outside the blockchain. Matching contract will create reputation contract, order matching contract and aggregating contract.
- REPUTATION CONTRACT
It check the past record of an Oracle to know the performance history of an oracle and reliability and it will remove some untrustworthy nodes. In other words, reputation contract check to make sure that the data source can be trusted.
- ORDER MATCHING CONTRACT
It sends the request contract's question to reliable nodes operators and also assess the votes. After checking the bids, it chooses from the list of nodes it get to handle the query. Chain link convert the request contract question into other code that make it access the real world and get information from the internet.
- AGGREGATING CONTRACT
This contract can validate contract from a single and multiple sources. For instance, if 10 node operators provide same score of the game and an other 4 node operators provide different game, what aggregating contract will does is to check all the game scores and remove the wrong scores. Reputation, order matching and aggregating contract works together.
Chain link network has a token called Link. The developer state that the maximum supply of the token will be 1 billion. At the time of launch, Link token price was $0.11 and now Link price sit at $7, which mean it has a 6263% increase from the launch price. It has circulating supply of over 467,009,546.53 token and that about 46% of it supply. They use the Link token to pay the node operators to ensure that they remain honest.
Since Chainlink is a decentralized network, everybody can use it and become a node operators by handling vital data related task. I believe you have learn one or two things from todays contents. Thank you for reading.