What is Chainlink?

Chainlink is a popular choice among investors looking to trade altcoins. However, before you Trade LINK, it is essential that you know what you are investing in. Let's find out what's Chainlink and how it works.

Chainlink, founded in 2017, is an abstraction layer for blockchains that allows for universally interoperable smart contracts. Chainlink is a decentralized oracle network that facilitates secure interactions between blockchains and third-party data feeds, events, and payment mechanisms, hence supplying the crucial off-chain information required by sophisticated smart contracts.

Data producers, node operators, smart contract developers, researchers, security auditors, and others contribute to the chainlink Network's success as part of the open-source community. The company's main goal is to ensure that all node operators and users who wish to contribute to the network can do so in a decentralized manner.

How is Chainlink different?

Chainlink was one of the first to integrate off-chain data into smart contracts. Chainlink is a key participant in the data processing industry because to its numerous reliable collaborations. Many reputable data providers, such as Brave New Coin, Alpha Vantage, and Huobi, have taken notice of Chainlink because of its use of off-chain data. Data suppliers can monetize their information by selling access to it directly to Chainlink.

Chainlink is a decentralized network where anyone may become a node operator and profit from maintaining the essential data infrastructure needed to run blockchains successfully. Chainlink leverages a distributed network of node operators to provide real-time, accurate pricing data for popular DeFi apps like Synthetix, Aave, Compound, and more.

Chainlink's original purpose was to compile and distribute cryptocurrency pricing data to DeFi protocols like Aave, but it has now expanded to do much more. Currently, the ecosystem has access to over 1 billion data points, protecting over $75 billion in value through 1,000 project connections with 700 oracle networks. Chainlink has worked with well-known companies, including AccuWeather, FedEx, FlightStats, and the Associated Press to verify data.

One of the most significant wins Chainlink has achieved is recruiting Eric Schmidt, former Google chairman, and CEO, to serve as a technical advisor to the oracle network protocol. Schmidt believes that "Chainlink is a secret ingredient to unlocking the potential of smart contract platforms and revolutionizing business and society, and he wants to work with Chainlink to create a future where truth is paramount. Schmidt is the latest high-profile advisor to Chainlink, following in the footsteps of former LinkedIn CEO Jeff Weiner and DocuSign co-founder Tom Gonser."

Chainlink plans to implement staking in 2022 so that LINK holders may help keep the network safe and receive incentives. Chainlink has spent a lot of time developing its staking solution, yet oracle networks are not a blockchain but a type of decentralized computing.

In order to encourage "sustainable growth and security." the Chainlink oracle network implemented LINK token staking in December 2021.

Chainlink aims to improve the oracle network's security by adding a new "crypto economic" layer through LINK staking. This will be achieved by allowing node operators and community members to stake LINK tokens in order to enhance the safety of Chainlink's oracle services.

Identical to other crypto-staking platforms, this requires token holders to stake some portion of their holdings in order to help secure the underlying Proof-of-Stake (PoS) network.

Despite its best attempts to be decentralized, Chainlink has come under fire for its apparent reliance on a small set of trustworthy nodes. This issue, however, is what LINK staking is hoping to fix.

LINK staking will provide benefits and punishments to encourage the efficient functioning of the Chainlink oracle network. As a result, node operators on the Chainlink network will have a better time receiving assignments and making money.

Participants in this system will pledge their LINK tokens as security. If a node gives false information, it may lose some or all of this collateral. The LINK tokens collected as a tax from dishonest validators will be transferred as profits to the validators who have been honest throughout.

The implementation of this crypto-economic security is something that Chainlink's creators are hoping would make it so that assaulting the network's pricing oracle is more expensive than the possible gains that would be made. Similarly, cryptocurrency networks like Bitcoin and Ethereum rely on gamification techniques such as this one.

Even if they do not manage a node themselves, LINK holders may still take part in staking by assigning their tokens to a reputable node operator. Developers of Chainlink predict that the staking program will initially provide a 5% return from Treasury emissions and fees paid by users of Chainlink's data feeds and that, eventually, the program will rely only on fees received by the network.

The community's involvement in staking will provide additional incentives for node operators to maintain their integrity. By assigning higher reputation scores to node operators that routinely deliver reliable data feeds, participants will have more leeway in deciding where to invest their capital.

How many LINK tokens are in circulation?

In September 2017, during LINK's ICO, Chainlink set a maximum and total supply of one billion LINK tokens. There were a total of 350,000,000 LINK tokens sold at the ICO price of $0.11.

As stated in the ICO whitepaper, 35% of the total token supply will be allocated to node operators and ecosystem incentives. The other 35% of LINK tokens were sold at public auctions. Last but not least, the remaining 30% of available tokens went to the firm to fund research and development of the Chainlink network and ecosystem.

Network Security

As an Ethereum-based ERC-20 token, Chainlink’s network is protected by the proof-of-stake (PoS) consensus process. While Bitcoin uses a proof-of-work (PoW) consensus, proof-of-stake (PoS) consensus uses the quantity of staked tokens to determine which nodes are accepted.

Founder

Chainlink Labs is run by Sergey Nazarov, who is also one of the company's co-founders and chief executive officer. He studied philosophy and business administration at New York University and finished with a degree in business administration. He got his start in the business world as a teaching fellow at NYU Stern. Nazarov co-founded ExistLocal, a social marketplace for authentic local experiences, in 2009.

He also helped launch CryptaMail in 2014, a blockchain-based email service with no central authority. Together with Steve Ellis, Nazarov released SmartContract in 2014, a platform that brings smart contracts to life by integrating them with external data and generally recognized bank payments. SmartContract was one of the business endeavors that led to the formation of Chainlink by Sergey Nazarov.

Steve Ellis earned a computer science degree from NYU in 2010. He joined Pivotal Labs as a software developer right after completing his degree. He co-founded the Secure Asset Exchange in 2014, a startup that provides easy online access to a decentralized asset exchange.

Where can you buy LINK?

LINK is available on the licensed cryptocurrency exchange CryptoForce and several other national and international exchanges.

Disclaimer: Cryptocurrencies are highly volatile and subject to market, technical, and regulatory risks. Crypto trading requires one’s own diligence, and Cryptoforce will not be responsible for any losses incurred. Any information provided here should not be regarded as Cryptoforce’s technical or financial advice.