Blockchain technology can be an extremely powerful resource, yet there remain several significant obstacles in its application to more advanced applications. Perhaps most challenging is accessing real-world information outside a blockchain (known as “offchain data”). Chainlink offers an innovative solution by providing smart contracts running on smart contract enabled blockchains with secure and reliable means of accessing external information sources securely and reliably.
Solution: Chainlink network of nodes delivers offchain data directly into on-blockchain smart contracts using oracles. By employing independent node operators, the Chainlink network prevents relying solely on one source such as API or IoT sensors from becoming the source for supply.
Whoever needs the offchain data submits their request via a smart contract-enabled blockchain. The Chainlink protocol then registers this as an event and creates three contracts: Order Matching Contract, Aggregating Contract and an Aggregating Contract to retrieve this data from oracles deemed reliable enough.
Once oracles have verified offchain data, an Aggregating Contract compiles all validated answers into one piece of data before forwarding it directly to the smart contract asking for this data.
If the data meets all requirements, then the Requesting Contract will take the action instructed by the Contract. Otherwise, if any failures occur with regard to oracles being used by the Requesting Contract then an alternative set will be explored until successful action can be completed by either of them.
Oracles are integral components of smart contract-enabled blockchains, but they do have their limitations. Many advanced applications used in decentralized finance (DeFi), for instance, rely on complex processes combining code on the blockchain with data from external sources like price feeds or IoT sensors; these “hybrid smart contracts” must therefore connect securely and reliably.
Chainlink was launched by Sergey Nazarov and Steve Ellis to solve this problem in an open-source, scalable manner. Their team’s diverse background spans crypto, the internet of things, enterprise software development – with Nazarov having worked in blockchain since 2011 as an expert on security and distributed systems while Ellis had served as CTO at Pivotal Labs as an accomplished software engineer. Other members include Ari Juels from Cornell Tech who directs IC3, along with Andrew Scullion who founded Blockstream and co-founded StreamLabs among many others – as well as Andrew Scullion who founded Blockstream and co-founded StreamLabs respectively.
