Chainlink is a fully decentralized oracle network which links smart contracts written into a blockchain with data from outside their network. Chainlink allows smart contracts to securely connect to external data sources, APIs, and payment systems, enabling the smart contracts to communicate with and gather data from sources outside the blockchain.
The network operates using an off-chain consensus mechanism consisting of oracle nodes which independently harvest responses to off-chain requests. The individual responses of each node are aggregated via a consensus mechanism into a global response, which is then fed back to the smart contract.
A major component of the Chainlink network is its cryptocurrency Chainlink (LINK), which serves as an incentive for the network's independent oracle node operators. The network utilizes LINK to pay node operators for services such as retrieving off-chain data, computation, and conversion of data into blockchain readable formats. The token is also available as an asset on common cryptocurrency exchanges.
Initially connected to the Ethereum network, Chainlink is expected to eventually support all major smart contract networks.Background
Smart contracts written into a blockchain cannot, by themselves, communicate with data which is off the blockchain that the smart contract is written into. In order to obtain the data that is necessary to properly execute the contract, an external data source is needed.
One option for providing smart contracts with external data would be through a centralized data source. However, this option leaves the data received by the smart contract vulnerable to hacking and manipulation, and does not solve the issue of needing to trust a centralized third party to properly execute the smart contract.
Another option for providing smart contracts with data is through an off-chain consensus mechanism, whereby multiple, independent "oracles"...