What is Chainlink?
Chainlink (LINK) is a decentralized network and platform that aims to connect smart contracts with global data. This type of connection is achieved using a tool called Oracle.
We can look at the oracle as an agent that finds and verifies real-world phenomena and delivers that information to the blockchain that is further used by smart contracts. Oracles provide the external data necessary to activate the execution of smart contracts when the pre-defined terms of the contract are met
Currently, most of the existing Oracles are centralized, ie they are located on one Node, which makes them vulnerable and resistant to unauthorized access due to hacker attacks. In case Nod crashes, the smart contract will stop working. To avoid such a scenario, Chainlink is building a secure decentralized network consisting of multiple oracles. What sets it apart from other solutions is precisely that Chainlink aims to build a secure decentralized network that will consist of a large number of oracles. This decentralized solution aims to avoid trust on one side and enable smart contracts to seamlessly interact with data outside of blockchain networks. This is the first step towards enabling smart contracts to replace the digital contracts used today in the near future.
Chainlink case studies
Some of the case studies of potential applications of smart contracts could include the following:
The smart contracts that will be used for the insurance will need to refresh the data related to the insured event in question. One example would be the question of whether the magnetic warehouse door was locked at the time of the burglary.
Trade finance smart contracts will require GPS data on deliveries, data from supply chains and customs data on goods shipped to confirm fulfillment of contractual obligations.
Lately, one of the most popular topics in the world of cryptocurrencies is the so-called DeFi. DeFi stands for Decentralized Finance. We can look at DeFi as an open financial ecosystem where you can create a variety of small financial tools and services in a decentralized manner. Currently, the most well-known examples of DeFi in the world of cryptocurrencies are open lending protocols.
An open lending protocol can be viewed in the same way as when a user does business with a bank, he puts some money in a deposit and when someone borrows digital assets he earns interest. However, instead of intermediaries (banks), here smart contracts dictate the terms of the loan, connect lenders and borrowers and are in charge of interest distribution. Due to the lack of intermediaries and the transparency of blockchain, the lender earns higher revenues and better understands the risks. Chainlink is currently the most reliable solution if you want to connect your smart contract with the real market values of digital assets.
Borrowing platforms require that the price be constantly updated to ensure the total value of the collateral. With the help of Chainlink, it is now possible to issue and settle loans, liquidate collateral and calculate the price of interest. A good example is the Synthetix project, which uses Chainlink for a price refresh to set prices on their derivatives trading platform, as well as the AAVE lending platform, which uses a price refresh to ensure the total value of collateral.
Another interesting thing about Chainlink is the so-called external adapter Tesla Chainlink. This external adapter allows interaction with Tesla inc servers used to interact with Tesla vehicles and other Tesla products such as Powerwalls batteries. It can also be used to interact with fake servers for various testing purposes.
LINK token and its application:
Chainlink’s ICO happened in September 2017 and the company raised $ 32 million.
Using the services of Chainlink oracles is not free. Chainlink's main token is called LINK and it is used to pay for Oracle, ie nodes that enable the secure data refresh service.
In the future, when Chainlink's network matures enough, smart contract makers will be able to require node owners to pledge collateral before accepting their business. Chainlink's team came up with this solution to make smart contract makers sure that oracles provide accurate and timely data. In case this is not the case, the owners of the nodes will be fined and this pledge will be taken away from them.
Chainlink and its competition:
Band, Tellor and DIA are Chainlink's main competitors in providing oracle services. The band is currently the biggest competitor to Chainlink although it currently has a total market capitalization of $ 119,849,206, compared to Chainlink’s market capitalization of a staggering $ 4,670,925,962.
Although ChainLink is a far more popular project than Band, here are some of the benefits of the Band protocol:
1.Chainlink's oracles are currently only compatible with Ethereum blockchain, while with the Band Protocol, oracles are compatible with dozens of blockchains, including Ethereum.
2.The band differs from Chainlink in the way data is requested. With Chainlink you can choose one of their verified providers and receive data after paying for a certain amount of LINK tokens, while with Band there is a chance that the data you need is already stored somewhere on the blockchain because it is constantly entered into the network. This is another important advantage of the Band because you can receive data faster and cheaper.
3.If you want to be a data provider with Chainlink, you will have to prove your identity by providing certain documentation, while with Band Protocol this is not the case, but anyone who has a certain amount of BAND tokens can become a validator.
Partnerships
These are some of the companies with which Chainlink has entered into partnerships: Credits, Oracle, V Systems, DApps Inc, Google Cloud, Matic, GoChain, Reserve, Harmony, Shyft, Hedera Hashgraph, IOST, Streamr, Ocean Protocol, Synthetix, Provable, Celer, STK, Mobilum, ETHA, Kaiko, Wanchain, Hydrogen , bZx, Morpheus Network, Web3, GameDex, OpenLaw, OpenZeppelin, ClinTex, BET Protocol.
Rating
LINK is one of the top 10 cryptocurrencies by market capitalization. It is currently priced at $ 12.02 and has a market capitalization of $ 4,670,925,962. Chainlink has a solid team and a reputable advisory board. Chainlink has established a large number of partnerships with various companies and that number is increasing day by day. Chainlink's community is very widespread and even more members are expected in the future. As for the competition, it exists, but it is still not seen that some of the competitors threaten to significantly endanger Chainlink, which still maintains its dominance in the market of providing oracle services.
