Chainlink's decentralized oracle network provides reliable, tamper-proof inputs and outputs for complex smart contracts on any blockchain.
Source : chain.link
Chainlink connects smart contracts on any blockchain to data providers, web APIs, enterprise systems, cloud services, IoT devices, payment systems, other blockchains, and much more.
Smart contracts are inherently disconnected, Blockchains are hereighly secure and reliable networks for value exchange but lack the functionality to natively fetch external data or send data to off-chain systems in a manner that retains end-to-end tamper-resistance.
Through the use of secure oracles, Chainlink extends the functionality of blockchains by connecting smart contracts to real-world data, events, payments, and more in a highly tamper-resistant and reliable manner.
For example, Chainlink provides the USD price of Ethereum’s native cryptocurrency ETH to blockchains via the ETH/USD Price Feed, which uses numerous independent oracle nodes and data sources to source and deliver the price data (pictured below). The ETH/USD price oracle can then be used by a blockchain application to get the current price of ETH when being used as collateral to obtain a loan or to settle a prediction made about the future ETH price.
ChainLink Pros :
1.End-to-end decentralization : Use decentralized oracle networks made up of independent and Sybil-resistant nodes for high availability and manipulation resistance.
2.Provably secure nodes: Provide cryptographic proof of the oracle networks' overall security as every piece of data is digitally signed by nodes and stored on-chain.
3.High-quality data: Access any password-protected or authenticated API data source, redundantly validated by multiple nodes to prevent any single points of failure.
4.Crypto-economic security:Leverage binding service agreements outlining the terms of an oracle service with financial penalties for poor results.
5.Defense in depth:Apply multiple layers of security such as cryptographic signatures, trusted execution environments, zero-knowledge proofs, and more.
6.Open-source community:Improve network security and accelerate development through ongoing contributions from node operators, developers, researchers, security auditors, and more.
7.Blockchain agnostic:Connect to all leading public and private blockchain environments from a single framework, providing a universal abstraction level for cross-network connectivity.
ChainLink popular use cases :
Get Crypto Prices in your Smart Contracts:Retrieve the latest prices of assets in your smart contracts with a single function call.
Generate Verifiable Random Numbers:Use Chainlink VRF to consume randomness in your smart contracts.
Call External APIs from Smart Contracts:Request & Receive data from any API using the Chainlink contract library.
Examples :
Decentralized Finance (DeFi)
Many traditional financial products like loans, payments, derivatives, asset equity, and more are being built on the blockchain using smart contracts to increase their security and transparency and reduce barriers to entry. These DeFi applications use Chainlink to price assets, access interest rates, verify collateralization, and more, which enable these products to perform functions like issue a loan at fair market value, automate the issuance of dividends, and settle an options contract.
Insurance
Smart contracts are also being leveraged to create parametric insurance contracts on the blockchain. Chainlink is currently being used in production to provide weather data to the Arbol crop insurance market, enabling farmers all over the world to obtain parametric crop insurance simply with an Internet connection, which is settled in a fair and timely manner according to the amount of rainfall, temperature, or other evaluators the policy is set to (e.g. if it rains more than x amount this year, pay out y settlement).
Gaming
Developers are also beginning to launch smart contract-based gaming applications on the blockchain. One of the key building blocks of many blockchain games is a source of randomness to generate random in-game scenarios or determine the lucky winner of prizes. Chainlink provides a randomness solution called VRF, which generates randomness and delivers it to the smart contract in a manner where users can prove it is fair and unbiased, as neither the players, game creators, or external entities can tamper with or manipulate the randomness to their advantage.
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