The project was created by Sergey Nazarov and Steve Ellis in 2019. The basis was the technology of decentralized oracles based on nodes. Some business models require data outside of the blockchain. This was the responsibility of oracles that were controlled by developers. For this reason, embezzlement of funds from the protocol was frequent. Chainlinks creators have improved the technology and eliminated the only data source. Now, a smart contract requires information from many oracles at once to get reliable data.
Chainlink is a network of oracles that unites a set of nodes. A single node operator can deploy several oracles. Each oracle may have multiple data sources.
Smart contracts receive quotes from various cryptocurrencies from centralized platforms . This is necessary when exchanging crypto assets through a decentralized exchange.
Aggregators receive trading and price data directly from exchanges and other trading platforms. The Chainlink nodes handle requests and manage oracles. The obtained data compares and compares a special contract Chainlink Aggregating Contract. When the nodes receive a response, the value is passed to the request sender.
Decentralized oracle technology is not only suitable for cryptocurrencies and finance. Chainlink cooperates with weather forecast services and insurance companies. DeFi-firm Truflation used Chainlink oracles to create its own consumer price index in the US. Chainlink provides smart contracts with the ability to connect to external APIs.
As of June 2022 , the project has more than 1,300 projects. In February 2022, Bank of America named Chainlink as one of the main reasons for DeFis growth. Among the operators of the Chainlink node, there are many large enterprises: Swisscom, Deutsche Telekom, Associated Press.
In early 2021, the developers published information about the Chainlink 2.0 project. The authors of the document focused on the development of hybrid smart contracts.
The Chainlink project has its own LINK token, which is released in the Ethereum blockchain. The coin is necessary for oracles and is an economic incentive for nod operators. LINK is also used to improve data processing accuracy and support contract stability in the network.
After its launch, Chainlink quickly gained popularity , and its token grew in value. In 2020, the cost of LINK rose by several hundred percent.
After the release of the fake news in 2020 that the developers are selling their LINK tokens, no panic occurred and the price of the coin only won. There was also a failed spam attack in which attackers sent massive requests for price data, which only led to an increase in the fee for operators.
A digital society needs a cryptographic truth system to prove an event, whether its random numbers, market data, weather events, or even calculations that an application needs with minimal trust. The Chainlink project is successfully solving this problem, probably in the near future, the protocol will be implemented in all spheres of society.