Chainlink

price
change

Discover Chainlink's fundamentals and latest news.

This content was generated by Whalee (BETA), an AI crypto assitant that analyses cryptocurrencies. Informations can be incomplete and/or erroneous. Please always double check and DYOR.

What is Chainlink?

Chainlink (LINK) is a decentralized oracle network that connects blockchain-based smart contracts with external data sources, enabling secure and reliable interactions between the blockchain and the real world. It provides a bridge for smart contracts to access real-world data, facilitating advanced use cases in decentralized finance (DeFi), insurance, gaming, and more.

How is Chainlink used?

Chainlink (LINK) is a decentralized oracle network that connects blockchain-based smart contracts to external data sources. Here is how it is used:

  1. Oracle Selection: Users draft a Service Level Agreement (SLA) specifying data requirements. The Chainlink software matches the user with the most appropriate oracles that can provide the data. The user submits the SLA and deposits LINK tokens in an Order-Matching contract, which accepts bids from oracles.

  2. Data Reporting: Oracles connect with external data sources, process the data, and send it back to the contracts utilizing the Chainlink service. This data is then used by smart contracts to make decisions or execute actions.

  3. Node Operators: Node operators stake LINK tokens to offer bids to provide data. They must then provide the information to the requesting contract. The node operator is incentivized to maintain the quality of their service, as they can earn more LINK tokens for providing accurate data and can be penalized if they fail to do so.

  1. Payment and Incentives: LINK tokens are used to pay node operators for their services. The price is set by the node operator based on demand for the data and the current market. Node operators also use LINK to stake in the network, demonstrating their commitment and incentivizing good service.

  2. Interoperability: Chainlink is designed to work across any blockchain with smart contract functionality, making it a versatile tool for integrating external data into blockchain applications.

Overall, Chainlink (LINK) enables the seamless integration of real-world data into blockchain-based smart contracts, ensuring the accuracy and reliability of these contracts.

How do I store Chainlink?

To store Chainlink (LINK) tokens, you have several options:

  1. Mobile Wallets: Use mobile wallets like Trust Wallet or Atomic Wallet. These wallets store private keys securely and can be transferred or recovered using a 12-word recovery key. However, they are still susceptible to mobile hacks.

  2. Web Wallets: Utilize web wallets like MetaMask or MyEtherWallet. These wallets are safer and support LINK as an ERC20 token. They are necessary for trading on some decentralized exchanges (DEXs) but are slightly more complicated to operate.

  3. Hardware Wallets: Consider hardware wallets like Ledger or Trezor. These wallets provide high security by storing private keys offline and support multiple cryptocurrencies, including Chainlink. Ledger, for instance, allows users to view, receive, and send LINK tokens within its environment.

  1. Self-Custodial Web3 Wallets: You can also store LINK tokens in self-custodial Web3 wallets, which provide more control over your assets.

Regardless of the wallet you choose, ensure you obtain it from official and trusted sources to minimize the risk of malware or other vulnerabilities.

How to buy Chainlink?

To buy Chainlink (LINK) tokens, follow these steps:

  1. Create an Account:

    • Open a free account on a cryptocurrency exchange like Binance or Kraken. You can also use a hardware wallet like Ledger to manage your Chainlink securely.
  2. Choose a Payment Method:

    • On Binance, select "Card" as the payment method and confirm. You can also use bank deposits or third-party payment channels.
    • On Kraken, connect a funding method to buy over 200 cryptocurrencies, including LINK.
    • On Ledger, buy Chainlink directly on the Ledger app from their partner Coinify using a credit card or bank transfer.
  3. Specify the Amount:

  • On Binance, select the amount of Chainlink you want to buy and review the transaction details.
  • On Kraken, specify the number of Chainlink tokens you want to buy and confirm the purchase.
  • On Ledger, use the Ledger Live app to manage your Chainlink and access key services like buying and storing your LINK tokens securely.
  1. Confirm and Store:
    • On Binance, confirm your order within 1 minute, and your Chainlink will be stored in your Binance account or personal crypto wallet.
    • On Kraken, your Chainlink will be stored in your Kraken account.
    • On Ledger, your Chainlink will be automatically sent to your hardware wallet and secured.

Remember to carefully consider your investment experience, financial situation, investment objectives, and risk tolerance before investing in cryptocurrencies.

Discover
Chainlink
We give you the tools to invest your time and money in 1000+ tokens.
Subscribe

History of Chainlink

Chainlink (LINK) was created in 2014 by Sergey Nazarov, Steve Ellis, and Ari Juels as a blockchain technology startup called SmartContract. The project began with a white paper published in September 2017, outlining the vision for a decentralized oracle network to provide real-world data to smart contracts. Initially, the Chainlink network was designed to be a centralized oracle system but later evolved into a decentralized oracle network. It launched in 2017 and has since become a leading project for oracle services in the crypto space, supporting various DeFi protocols such as Aave, yearn.finance, and crypto.com.

Discover
Chainlink
We give you the tools to invest your time and money in 1000+ tokens.
Subscribe

How Chainlink works

Chainlink (LINK) is a decentralized oracle network that enables smart contracts to securely access external data feeds, web APIs, enterprise systems, cloud services, IoT devices, payment systems, and other blockchains. It acts as a bridge between the blockchain and the outside world, allowing smart contracts to interact with external data and events.

Key Components
  1. Oracles: Chainlink uses a network of nodes, known as oracles, to provide data and information from off-blockchain sources to on-blockchain smart contracts. These oracles are incentivized to provide accurate data through a system of rewards and penalties.

  2. Node Operators: Node operators are responsible for retrieving and formatting data from external sources. They set their own fees for their services, which are paid in LINK tokens. The size of a node operator's stake in LINK tokens affects their likelihood of being selected to fulfill data requests.

  3. Smart Contracts: Chainlink supports hybrid smart contracts, which integrate on-chain code with off-chain data infrastructure. These contracts can execute based on inputs and outputs from both blockchain and external sources.

Functionality
  1. Data Feeds: Chainlink provides decentralized price feeds for various assets, enabling stablecoins to maintain their reserve ratios in real-time. It also supports on-chain reserve monitoring for wrapped tokens, ensuring they remain fully collateralized.

  2. Decentralized Finance (DeFi): Chainlink's decentralized oracle solution allows DeFi platforms to access reliable market data, facilitating borrowing, lending, and earning interest without central authorities.

  3. Yield Farming: Chainlink supports yield farming by providing data for DeFi platforms, enabling users to deposit assets and earn interest.

  1. Randomness Solution: Chainlink offers a randomness solution called VRF, which generates randomness and delivers it to smart contracts in a secure manner.
Security and Incentives
  1. Staking: Node operators must stake LINK tokens to demonstrate their commitment to the network and incentivize good service. The Chainlink Reputation Contract considers the size of a node's stake when matching nodes with data requests.

  2. Punishment for Faulty Nodes: The Chainlink network punishes faulty or dishonest nodes by taxing their stake of LINK for poor service, ensuring that node operators are motivated to provide accurate data.

Use Cases
  1. Stablecoins: Chainlink's decentralized price feeds help stablecoins maintain their peg to underlying assets.

  2. Wrapped Tokens: Chainlink ensures that wrapped tokens, such as Wrapped Bitcoin (WBTC), remain fully collateralized by monitoring reserves on both the native and target blockchains.

  3. Decentralized Finance (DeFi): Chainlink supports DeFi platforms by providing reliable market data, enabling borrowing, lending, and earning interest without central authorities.

  1. Yield Farming: Chainlink's data feeds facilitate yield farming on DeFi platforms, allowing users to deposit assets and earn interest.

  2. Traditional Systems: Chainlink provides a way for traditional systems, such as data providers, IoT networks, and enterprises, to make their data and services available to any blockchain network.

Conclusion

Chainlink is a decentralized oracle network that bridges the gap between blockchain smart contracts and external data sources. By providing a secure and reliable way for smart contracts to access off-chain data, Chainlink unlocks new use cases for blockchain technology and supports the growth of decentralized finance and other applications.

Discover
Chainlink
We give you the tools to invest your time and money in 1000+ tokens.
Subscribe

Chainlink's strengths

Chainlink (LINK) has several strengths that contribute to its success and widespread adoption:

  1. Industry Standard: Chainlink is the industry-standard Web3 services platform, having enabled trillions of dollars in transaction volume across various industries such as insurance, gaming, and NFTs.

  2. Decentralized Oracle Network: Chainlink is a decentralized oracle network that securely connects smart contracts to external data sources, ensuring the integrity and reliability of data used in smart contracts.

  3. High-Quality Data: Chainlink has credential management capabilities, allowing it to fetch and deliver data from premium, password-protected data sources, which is particularly important for secure transactions involving user funds.

  1. Flexibility and Interoperability: Chainlink is a highly flexible and blockchain-agnostic oracle framework that can transmit any kind of data to and from any blockchain environment, making it a versatile solution for various use cases.

  2. Security and Transparency: Chainlink oracle networks consist of security-reviewed and tamper-resistant nodes, and their performance data are publicly available, ensuring transparency and trust in the network.

  3. Scalability: Chainlink can scale to thousands of secure nodes within a network through off-chain reporting and threshold signatures, making it a highly decentralized and cost-efficient solution.

  1. Adoption and Network Effects: Chainlink is the most widely used and adopted oracle solution in DeFi, securing billions in value in production for innovative DeFi protocols, which creates a growing network effect attracting more users.

These strengths have positioned Chainlink as a leading solution for connecting smart contracts to external data sources, ensuring the reliability and security of data-driven transactions.

Chainlink's risks

Chainlink (LINK) is subject to several risks that investors and users should be aware of. These risks include:

  1. Inherited Risk from Ethereum: As an ERC-677 token, Chainlink is vulnerable to any bugs or issues that may affect the Ethereum network, which could impact its performance and security.

  2. Market Manipulation: Chainlink's price can be influenced by market manipulation, which is a significant concern for investors. This is reflected in its moderate risk gauge score, indicating that it can be manipulated by analyzing the amount of money needed to shift its price over a 24-hour period, along with changes in volume and market capitalization.

  3. Cross-chain Bridge Risks: When moving LINK tokens across different blockchain networks using cross-chain bridges, there are risks involved. Bridge attacks have resulted in significant cryptocurrency hacks, and users must assess the risks associated with the bridge they use. These risks include smart contract bugs, systemic financial risks, and the early stage of bridge technology, which raises questions about its performance in different market conditions.

  1. Oracle Risks: Chainlink's decentralized oracle networks (DONs) are designed to mitigate risks associated with centralized oracles. However, ensuring the quality of external data inputted into the blockchain remains a challenge, as even basic data requests can be unreliable if not sourced from trusted providers.
Discover
Chainlink
We give you the tools to invest your time and money in 1000+ tokens.
Subscribe

Did Chainlink raise funds?

Discover
Chainlink
We give you the tools to invest your time and money in 1000+ tokens.
Subscribe

Chainlink’s team

  • Sergey Nazarov: Co-founder and CEO of Chainlink, a decentralized oracle network that connects blockchains with the outside world. He is a veteran in the blockchain industry and has been involved since its early days.
  • Steve Ellis: Co-founder and CTO of Chainlink, responsible for developing self-executing, data-driven digital agreements. He has extensive experience in software engineering and has worked on various projects, including Secure Asset Exchange.
  • Tom Gonser: Founder of DocuSign, a leading e-signature company. He is a seasoned entrepreneur, executive, and board member who contributes to Chainlink's vision of creating a fair, unbiased world powered by cryptographic guarantees.

Whalee AI

The fundamental analysis assistant for crypto value investors.

Chainlink NEWS REPORT

Latest news

Want an analysis of Chainlink? Tell us on discord.

Help us improve!
Tell us what you think of this page and which features you would like to see next.
OPEN FORM