Chainlink and Oracle: the essential bridge between blockchain and the real world

Ethereum smart contracts are powerful – but they are blind to the world outside the blockchain. Don’t know what the Bitcoin price is, don’t know what the weather is like, don’t know sports scores. This is where Chainlink comes in.

What is Oracle?

Oracle is a service that provides smart contracts with real-world information. Without Oracle, a DeFi contract cannot know the price of the assets it manages. Chainlink is the leading protocol in the Decentralized Oracle field.

How does Chainlink work?

Chainlink uses a distributed network of “nodes” that collect data from different sources and display an average. Result: manipulation-resistant data that can be safely used in a smart contract. LINK is the token used to pay the nodes.

Uses

Price Feeds: DeFi asset prices (Aave, Compound, Uniswap). VRF (Verifiable Random Function): random numbers for gaming and NFT. CCIP (Cross-Chain Interoperability Protocol): communication between blockchains. Proof of Reserve: Verification of reserves of Stablecoins.

What next?

Chainlink 2.0 adds staking on LINK and expands services. Collaborations with SWIFT (the global banking system) indicated that Chainlink could serve as a bridge to traditional banking. Read about DeFi protocols.

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