ChainLink Explainer

[Anonymous No.8495269]

A fair amount of background information is required to understand it, not just technology wise but also about the obstacles preventing adoption. I'll try and be succinct but will fail.

There's a blockchain concept called a Smart Contract. It's like a small application that can be published to blockchains like Ethereum. If you feed it a tiny amount of Ether, it executes. Smart Contracts can be used to enforce a trustless agreement between two parties.

For example, two parties want to gamble. A Smart Contract will choose a random number and if it's even, party A wins and if it's odd, party B wins. They both send their Eth, the contract executes, chooses a number, then pays the eth to the winner without fail.

That's not a very interesting Smart Contract and most in existence today aren't interesting either, predominantly because of a limitation to blockchains that ChainLink will solve.

Blockchains will never have access to data off-chain, like financial data, weather data, etc without the use of a bolt on called an Oracle. Oracles can be made to be ready to look up information and input it to a Smart Contract. For example, say the two parties wanted to bet on the temperature on a given day instead. Both parties pay the Oracle, the Oracle sets up a smart contract, sources the current temperature on the day, and the smart contract pays the party who wins the bet.

The problem is that currently Oracles are centralised, this means they are run off chain by a 3rd party company who cannot possibly be trusted by the financial world to operate in a fully trustless manner. Having to trust a third party with this crucial step (sourcing the data without bias) makes the whole benefit of using smart contract pointless because if trustless isn't important then you would use paper contracts and third parties to start with.
Part 1/2

[Anonymous No.8495279]

>>8495269
Part 2/2
This is known as the Oracle Problem and it's where ChainLink comes in. ChainLink is creating a smart contract that can interact with a network of independent (decentralized) nodes that can source any data using APIs.

Two parties place their bet using a ChainLink Smart Contract which will ask as many nodes as the parties request to tell it the temperature to form a decentralized consensus. Nodes giving the popular answer are rewarded with LINK and reputation while those found to be wrong will have their staked LINK given to the parties and lose reputation.

The parties could also choose to use just one node depending on the type of data being sourced but this of course limits the resiliency benefits of using decentralization.

The company behind ChainLink are particularly interesting. They have been working directly with the financial services world and have shaped their solution to enable banks and insurance brokers to use ChainLink with their existing legacy systems by supporting any API. This is seen by many, companies and speculators, as the solution to adoption of Smart Contracts and the beginning of a massive disruption to how the world forms agreements. The use cases are endless.

[Anonymous No.8495391]

>>8495269
>>8495279
I tried adding info about smart contracts and the oracle problem to wikipedia but the admins deleted it all saying I was shilling. If you're good at citing sources and explaining shit maybe you could edit the article?

[Anonymous No.8495538]

>>8495391
Perhaps once Mainnet is launched. I can imagine right now any in-Dev blockchain innovations are probably deleted.