hainlink is a decentralized network of nodes that provide data and information from off-blockchain sources to on-blockchain smart contracts via oracles.
William S.Clevend brought data science into life, he combined computer science and data mining by making statistics more technical, now you can take advantage of computer for statistics. The rise of big data in 2010 led to the rise of data science to support the needs of the big businesses. To understand the benefits of Chainlink and how it functions, you need to understand some fundamental, interconnected concepts. Let’s start with smart contracts.
Smart contracts are pre-specified agreements on the blockchain that evaluate information and automatically execute when certain conditions are met. Crowdfunding is a good example: if a certain amount of Ether is deposited into a smart contract by a certain date, then payment will be released to the fundraiser — if it is not, then payment will be returned to donors. Because smart contracts exist on a blockchain, they are immutable (can’t be changed) and verifiable (everyone can see them), guaranteeing a high level of trust among parties that they accurately reflect the stated parameters of the agreement and will execute if, and only if, those parameters are met. For smart contracts to craft agreements beyond those that pertain to data found on the blockchain, they require off-chain data in an on-chain format. The difficulty in connecting outside information sources to blockchain smart contracts in a language that they both understand is one of the main limitations in how widely smart contracts can be used. This is where oracles come into play. An oracle is software known as ‘middleware’ that acts as an intermediary, translating data from the real world to smart contracts on the blockchain and back again. However, a single centralized oracle creates the very problem a decentralized, blockchain-secured smart contract aims to solve — a central point of weakness. If the oracle is faulty or compromised, how would you know if your data is accurate? What good is a secure, trustworthy smart contract on the blockchain if the data that feeds it is in question?
Chainlink is a decentralized network of nodes that provide data and information from off-blockchain sources to on-blockchain smart contracts via oracles. This process, along with extra secure hardware, eliminates the reliability issues that might occur if using only a single centralized source. The Chainlink protocol registers this request as an ‘event’ and in turn creates a corresponding smart contract (Chainlink Service Level Agreement (SLA) Contract), also on the blockchain, to get this off-chain data. The Chainlink SLA Contract generates three sub-contracts: a Chainlink Reputation Contract, a Chainlink Order-Matching Contract, and a Chainlink Aggregating Contract. Chainlink nodes then take the Requesting Contract’s request for data and use “Chainlink Core” software to translate that request from on-blockchain programming language to an off-blockchain programming language a real-world data source can understand. This newly translated version of the request is then routed to an external application programming interface (API) that collects data from that source. Once the data has been collected, it’s translated back into on-blockchain language through Chainlink Core and sent back to the Chainlink Aggregating Contract.