ChainLink (LINK) Review – A Secure Blockchain “Middleware” Solution
|White Paper URL||https://link.smartcontract.com/whitepaper|
Smart contracts can’t access data on their own; they need middleware to connect them to the real world. ChainLink (LINK) provides a reliable connection to external data that is provably secure end-to-end. It can be thought of as a “blockchain middleware.” With ChainLink, developers can launch their own API and enterprises can sell their data or APIs by smart contracts. ChainLink is also blockchain-agnostic, supporting many leading blockchains such as Ethereum, Bitcoin, Hyperledger and others.
Table of Contents
The Idea Behind ChainLink
With an increasing number of smart contracts being adopted by blockchain technologies, data feeds will be required that are secure, able to communicate with external APIs, and maintain privacy.
At the moment, current solutions do not yet exist in the marketplace. Blockchains currently lack the networking capability to do this. Oracles do exist which can connect these external data feeds to the blockchain, but they are centralized.
Although single sources of data for a smart contract are available, these are less than ideal solutions are they are insecure and vulnerable to corruption. Finally, data requests which are transmitted through the blockchain might seem like a solution at first glance, but are publicly available, posing a problem when the data is sensitive or needs to remain private.
As a decentralized network, ChainLink has stepped into this vacuum, offering several values:
- It can connect to any existing API by easily connecting smart contracts on various networks to your existing applications.
- It can send widely used payments to existing bank accounts or widely used payment networks.
- It can connect with other chains, creating secure cross-chain connectivity between a main smart contract and any other public or private chain.
Both ChainLink’s team and advisory board is impressive. The founder of ChainLink, Sergey Nazorov, keeps a low profile, and the company has been described as one without a lot of hype surrounding it. Sergey has deep experience in cryptocurrency and building peer-to-peer marketplaces, having worked as part of the investment team at FirstMark Capital, an early stage venture capital firm based in New York City. FirstMark Capital has had the privilege to work with some of the most successful businesses in the startup world like Pinterest, Shopify, Airbnb, Riot Games, InVision and Tapad.
Steven Ellis, the company CTO, previously worked as a software engineer and cofounder at Secure Asset Exchange, where he built an end-to-end conversion tool for users to easily transfer value between blockchains. Before that, he was a software engineer at Pivotal Labs. His role there included helping clients hire and make responsible technical decisions for building stable, scalable applications. Both Sergey and Steven have bachelor’s degrees from New York University.
Their advisory board includes Ari Jules, a professor of computer science at Cornell and co-director of IC3, as well as Andrew Miller, a leader in decentralized consensus research. Andrew is also an association professor of computer science at the University of Illinois as well as an advisor to Zcash and Tezos. In addition, Evan Cheng sits on the advisory board, currently the director of engineering at Facebook. He is well-known as one of the creators of LLVM which is found on every Apple device and much of Google, Nvidia and Intel.
ChainLink has a number of strategic partners and investors, among them Signal Capital, a London-based private asset firm, who has invested heavily in the company.
SWIFT, the largest payment messaging service in the world, selected ChainLinks (then known as SmartContract before it rebranded) as a contract winner at its 2016 Sibos conference in 2016. The following year it announced a partnership with the company.
Zeppelin_os, a platform for developing, managing, and operating smart contract applications in Ethereum also announced that ChainLink will provide Zeppelin_os with proven oracle services for major decentralized applications. Instead of creating the oracle infrastructure themselves, the partnership will allow Zeppelin_os to focus on platform development.
Request Network, a decentralized network build on top of Ethereum that allows anyone, anywhere to request a payment, has announced that they are considering several solutions for a decentralized oracle network, and ChainLinks is one of them.
In addition, as part of its IC3 partnership, the company has worked together with Cornell on a Town Crier, an authenticated data feed of the daily ether to USD price. The IC3 is a group of prestigious computer science researchers from top universities, including Cornell, Berkley, EPFL, ETH Zurch and the University College London.
ChainLink Price History
LINK had an ICO that took place in September 2017, with its token initially selling for $0.11. The token rose to a price of $1.29 in January following the announcement of its partnership with ZeppelinOS.
The ChainLink Technology
ChainLink’s technology includes several key components:
- Oracle selection – A service level agreement (SLA) proposal is created, detailing requirements. Purchasers submit their SLA proposals to oracles listed off-chain. They then submit their proposal to an order-matching contract, which triggers a log for them to monitor based on their capabilities and objectives. Oracles bidding on contracts are committed to them, and breaking the commitment requires paying a penalty. Those who are not selected have the penalty payments returned to them. Oracles that are selected perform the assignment.
- Data reporting – Off-chain oracles execute the agreement, reporting back on-chain.
- Result aggregation – After results of the oracle contracted are completed, results are delivered to the aggregating contract, which takes all the results together and creates an average, which is reported to the contract.
Off-chain functions include oracles nodes connected to the Ethereum network. These nodes are responsible for collecting data off-chain as requested. The responses to off-chain requests are gathered through consensus mechanisms that are turned into a contract, which is where ChainLink Core comes in, a core node software that enables interactions with ChainLink’s blockchain. Data is then processed and ChainLink Core delivers it to the on-chain oracle contract. Node
operators responsible for these transactions are paid in LINK, the native token for ChainLink.
Distributed Sources and Distributed Oracles
Unlike competing solutions, ChainLink is 100% decentralized, solving security issues with source and oracle distribution. In other words, oracles who want to be trustworthy can draw data from a variety of sources, contracting out requests to multiple off-chain oracles nodes. The result is that any request is receiving its data from a balanced aggregation of data rather than a centralized source.
The LINK Token
The LINK token is an ERC-20 utility token used to pay ChainLink node operators for their efforts. This includes paying data feeds providers (smart contract data inputs), payment oracles (smart contract payment outputs) and maintaining a reputation system for payment oracles. Smart contracts on networks such as Ethereum that wish to use a ChainkLink node must pay using LINK tokens.
LINK tokens were allocated in the ICO as follows:
How to Purchase LINK
LINK is also available on the following exchanges:
- Huobi (Trade LINK with BTC on Huobi)
- Huobi (Trade LINK with ETH on Huobi)
- Mercatox (Trade LINK with ETH on Mercatox)
- OKEx (Trade LINK with BTC on OKEx)
- Gate.io (Trade LINK with USDT on Gate.io)
How to Store LINK
LINK can be stored in any wallet that supports ERC-20 tokens such as Coinomi, MetaMask and Myetherwallet. For maximum security, however, you should store your LINK on hardware wallets such as Ledger Nano S and Trezor.
Roadmap and Future Plans
ChainLink has not detailed a roadmap in its whitepaper nor its website. Instead, it has a Pivotal Tracker, an agile project management tool that is open to the public. The testnet version of ChainLink has been ready since the beginning of the year. The team is now working on mainnet.