Chainlink is an intelligent and implemented platform that uses Link encrypted currency for its network transactions. ChinaLink is actually a bridge between the real world and smart Blockchain contracts, which in this article on shetcoiner we will talk about what Chainlink is and explain that completely.
What is Chainlink?
Chainlink was introduced in 2017 by Sergey Nazarov and he is one of its founders. Chainlink is an encrypted network of nodes based on Blockchain. Blockchain Chainlink, through Oracle, establishes a link between real-world data and smart contracts, and that’s its job. Also, Chainlink Blockchain, like Ethereum and Bitcoin Blockchain, is decentralized in the sense that no one can interfere in it or have control over its affairs.
Also, LINK tokens and cryptocurrencies as coins are associated with this Blockchain, which is one of the erc20 standard tokens. This cryptocurrency is used to pay for transactions on the Chainlink network.
In addition, in recent months, the price of this cryptocurrency has risen sharply and has given a lot of profit to its initial buyers and investors that we will talk about it in this article on shetcoiner.
What is the function of Chainlink?
Smart contracts are pre-defined contracts that are created to analyze the situation in the Blockchain. These contracts rely on certain terms and data to evaluate their final decision, and since smart contracts are based on Blockchain, both are immutable and cannot be changed, so nobody can delete it. Despite these features, smart contracts have limitations that make them dependent on data beyond the Chinese Blockchain.
Read about smart contracts: What is Smart Contract?
This is the place that out-of-chain data should be translated into in-chain formats, but due to the difference between in-chain and out-of-chain language, linking external data sources to smart contracts is difficult. Chainlink’s task is to solve this problem by a decentralized Oracle network. Oracle acts as an intermediary and translates data from external sources into a language understood by internal smart contracts.
How Chainlink can works?
As mentioned in the previous section of this article on the shetcoiner site, Chainlink is a decentralized network that gathers information through Oracle from sources outside its Blockchain and prepares it for smart contracts within the Blockchain. Here is how Chainlink is collected and operated:
When a smart contract needs information, it sends a request to get the information it needs. The chainlink protocol considers the submitted request as an event and subsequently creates another smart contract, called the chainlink Service Level Agreement (SLA), to collect data from sources outside the Blockchain.
The SLA creates three subcontracts called the credit agreement, the order matching agreement, and the association agreement and we explain it to you in the below:
Credit Agreement: This agreement evaluates and validates the history of Oracle Knot to ensure its validity and performance. During this process, unreliable and inefficient nodes are removed.
Order matching Contract: Submits the contract request to the node and receives their bids in return. It then specifies the type and number of correctors to respond to the request.
Association Contract: Collects all information collected by selected oracles for evaluation, compliance and validation. At this point, China Links translates the request from in-chain language to out-of-chain language to understand external API resources. Then directs the translated request to the API. APIs collect data from an external source. After collecting the required information, the information is translated into the language within the chain and sent to the CAC.
Finally, after these steps, smart contract operators use LINK cryptocurrency to pay for the performance of the Chainlink Blockchain node. The LINK price is also determined based on the data demand and the current market for this type of data in the Chainlink Blockchain.