Key Takeaways
- Chainlink is crypto’s top decentralized oracle network, known for providing price data to power DeFi applications.
- The network is planning to launch a token staking and node delegation system.
- The updates could help make Chainlink more secure and decentralized, potentially sparking renewed interest in the project.
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Plans to grow Chainlink’s oracle network and shore up its security through a new token staking system could give the project a new lease of life in late 2022.
What Is Chainlink?
Chainlink is a decentralized node network that provides data and information from off-chain sources to blockchain smart contracts via oracles.
When a smart contract needs to source external data, such as Bitcoin’s price in USD, it can request it from Chainlink’s oracle network. When a contract makes a request, eligible oracles provide answers, and then a Chainlink Aggregation Contract takes all the data from the oracles and reconciles it for an accurate result. Oracles are then rewarded with LINK tokens for their efforts. While Chainlink is best known for providing oracle services to decentralized finance protocols that rely on off-chain price feeds, it also provides prompt, accurate off-chain data reports for everything from the SWIFT payment system to AccuWeather.
Currently, only Chainlink oracles run by professional teams of node operators, infrastructure engineers, or companies who build infrastructure exclusively for Chainlink are allowed to provide data feeds and earn LINK. While anybody can start running a node, only those who pass Chainlink’s approval process are tasked with providing data. Subsequently, Chainlink is not as decentralized as blockchains such as Ethereum where anyone with 32 ETH can run a full node and help validate transactions. However, it’s worth noting that Chainlink’s nodes are distributed in data centers across the globe, making the network more resilient than other more centralized oracles.
By reliably connecting data from different off-chain sources to on-chain smart contracts, Chainlink has become an invaluable piece of blockchain infrastructure. According to Defi Llama data, the Chainlink oracle network secures around $15 billion of value across all protocols that use its data feeds. In May 2022, Chainlink co-founder and CEO Sergey Nazarov estimated that Chainlink has at least 60% of the market share in blockchain verticals such as DeFi and gaming.
Despite its position as the…
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