Chainlink has become the leader in oracle systems in the cryptocurrency space, and many successful DeFi protocols such as Aave, yearn.finance, etc. rely on Chainlink to provide accurate real-world data. This article will take an in-depth look at how Chainlink works, the value of LINK coins, and ways to purchase LINK coins in Taiwan.
What is Chainlink?
Chainlink is a decentralized oracle system designed to provide off-chain real data to the blockchain. Simply put, Chainlink successfully connects the blockchain to the outside world, creating a multi-node distributed information aggregator. This is similar to the operating mechanism of Bitcoin, and the purpose is to provide trustworthy and non-tamperable data to smart contracts.
Imagine living alone on an uninhabited island with no contact with the outside world. One day, he met a passing traveler who told him what was happening in the outside world. The traveler is like an oracle, while the uninhabited island symbolizes the closed world of the blockchain. The role of the oracle is to transmit information from the outside world to the blockchain.
The definition of oracle and its relationship with smart contracts
An oracle is a tool that provides external real data to the blockchain, acting as a bridge between smart contracts and real-world data. For example, Xiaojun and Xiaojiu want to bet on the outcome of a sports match, and they entrust the bet to a smart contract. When the game ends, the smart contract needs to know the result of the game, and then an oracle is needed to tell it.
The role of the oracle is similar to an API interface, connecting real data from the outside world to the blockchain to ensure that smart contracts can be executed correctly.
Why do you need an oracle?
Blockchain is a closed system and cannot directly interact with external data. Each blockchain is an independent small world and can only process its own internal data. This means that without oracles providing external data, the blockchain cannot interact with the real world, thus limiting its application potential.
The emergence of oracles is precisely to solve this problem, provide real data off the chain, and promote the substantive application of blockchain technology.
Chainlink Innovation and Advantages
One of Chainlink’s major innovations is its decentralized oracle network. Unlike centralized oracles, Chainlink ensures data authenticity and reliability through multi-point data collection and verification. Centralized oracles may cause data inaccuracies due to single points of failure, which will have a serious impact on the execution of smart contracts.
Chainlink’s decentralized model effectively avoids this problem and ensures the diversity and accuracy of data sources. According to data from DeFi Pulse, there are currently more than $9.9 billion in assets locked in smart contracts, and the authenticity and reliability of data is particularly important in the DeFi field.
How Chainlink works
Chainlink’s operations involve both buyers and providers of data. Buyers request data, and data providers return data in a secure manner. Providers need to pledge LINK coins as a deposit when bidding. If false data is provided, the deposit will be forfeited.
For example, if we want to know the real-time price of Bitcoin, Chainlink will randomly select multiple nodes, and these nodes will use API to connect to the external database to obtain the price of Bitcoin. This approach can effectively avoid data inaccuracies caused by problems with a single data source.
The role and prospects of LINK coin
LINK coin is Chainlink’s native token and is an ERC-20 type with additional features of ERC-223. The main purpose of LINK coins is as a reward for data providers, motivating them to provide accurate data.
LINK coin supply
Token name: LINK
Token type: ERC-20
Issue price: $0.11
Initial supply: 450,509,553 (45% of total supply)
Total supply: 1,000,000,000 LINK
Release date: September 2017
Currently, the Chainlink team holds approximately 25% of LINK coins, and these funds will be used to promote the development of the Chainlink project.
Conclusion
As the leader in cryptocurrency oracles, Chainlink has successfully connected blockchain with real-world data due to its decentralized nature and reliable data sources. With the rapid development of the DeFi field, Chainlink's application prospects will become even broader. Whether for investors or technology enthusiasts, understanding Chainlink is very important. Hopefully this article helped you gain a deeper understanding of Chainlink and the value of the LINK coin.