Chainlink, also known as LINK, is a cryptocurrency whose goal is to have a global computer network feeding real-world data to smart contracts which run on top of blockchains.

Chainlink and the Role of the Oracles

As Smart Contracts sometimes need to rely on external data in order to execute their terms in proper fashion, Chainlink aimed to tackle this issue head on by means of Oracles, data providers which act as a bridge between the outside world data and their respective smart contracts.

By providing accurate data, Oracles are rewarded with a high reputation score and Chainlink’s own crypto, LINK, which, in turn, incentives them to do more and to do better.

Chainlink Explained

Chainlink’s processes have three steps:

1. The Oracle Selection stage: Chainlink users set their data requirements in an SLA (or service-level agreement) which is then used by the software in order to match the user with the Oracle which can provide that specific data.

After setting those parameters and submitting the SLA, users will deposit LINK (the crypto) in what is called an “Order-Matching contract”, a protocol which accepts bids from Oracles.

2. The Data Reporting Stage: In this phase, Oracles connect with in real life sources as to attain the necessary data which the SLA requires.

The data is processed and sent to the contracts.

3. The Result Aggregation Stage: after all results are in, they are promptly tallied, collected and return to what is known as an “Aggregation Contract”, a protocol which analyses the responses’ validity, assigns them a weighted score, and by using the sum of all the data it receives, sends the result to the user.

Chainlink and Independent Oracles

Chainlink also interacts with Oracles outside of its blockchain by means of two components which work together in retrieving SLAs and bridging node and the external data: the Chainlink Core and the Chainlink Adapter.

The History Behind Chainlink

The Chainlink Network saw its launch in June 2017 on the back of a for-profit company known as SmartContract.

Its founders were Sergey Nazarov and Steve Ellis and its initial coin offering (ICO) raised around $32 million USD on the sale of 35% of its crypto’s 1-billion-unit supply. The other tokens were distributed between SmartContract (30%) and used as means for development and incentivizing their node operators (35%).