Sunday, November 27, 2022

Oracles: Why Ethereum Necessitates ChainLink

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Oracle Means

For essential data input, an oracle network eliminates the need to rely on a single member. If the data interface to the real world may compromise, it’s pointless to use a trustless, decentralized, fault-tolerant, and Turing-complete blockchain smart contract platform. The goal of smart contracts defeats if the data is incorrect or malicious. Smart contracts limits blockchain-to-blockchain interactions. Building apps that have practical applications, they need to be able to access real-world data. Is ChainLink the solution?

A wide range of uses and applications offers by Oracle smart contract nodes:

  • First, real-time access to price lists, tax lists, and sanctions lists
  • Second, Payments made automatically based on metric-based parameters (eg. bonuses of employee for exceptional performance)
  • During calamities, automatic insurance payouts are made (during drought for farmers, during a flood for car owners)
  • Then, Retail purchases, merchant payments, and transfer amounts can all be read
  • Contract scheduling based on time and events (salary is transferred on first of every month to account)
  • Finally, Records of product expiration or creation (supply chain management or people)

Decentralized Oracle Network

Because an oracle is essentially an application/service that connects the blockchain to the real world, the true challenge for smart contract authenticity is ensuring that the oracle isn’t hacking or feeding incorrect data. Here’s the rub: what’s the point of employing a trustless blockchain smart contract if you’re going to entrust real-world data to a third party anyway? It negates the objective of a smart contract built on the blockchain. Thus, it adds a centralized input layer to a platform that supposes decentralized.

ChainLink (LINK) can help with this. The coin aims to provide a monetary incentive for the ChainLink network to cooperate. Users may trust their data because it is verified by numerous independent sources thanks to an inbuilt reputation system, bidding system, and a decentralized network that relies on independent oracle service providers. Indeed, the most trustworthy nodes are the most profitable, and bad actors eliminate from the system. This creates a free-market economic incentive for oracle services to provide consistently reliable data. Read the ChainLink whitepaper for a comprehensive explanation.

Across JSON Meme

ChainLink is a blockchain-independent platform. In the oracle space, not all of its competitors are. Despite being an ERC20 token, ChainLink does not require Ethereum to survive. However, If Ethereum dies in the future, the LINK tokens can disperse via airdrops on a different network. The tokens are just a way of using blockchain-based economics to provide value to oracle providers. And, the ChainLink network can connect to any blockchain and query hundreds, if not thousands, of oracles for any smart contract on that blockchain. For instance, Ethereum needs ChainLink to survive, not the other way around. We only know that ChainLink works with Bitcoin, Ethereum, and Hyperledger blockchains for now because the mainnet doesn’t deploy yet. Some of ChainLink’s primary competitors, such as Microsoft Coco and Mobius, are not Byzantine fault-tolerant.

In conclusion, ChainLink differs from all of the other oracle services listed above (excluding Mobius and Hivemind) in that it does not require the smart contract to trust external data sources. Because ChainLink’s network is decentralized, it may be both trustless and verifiable. I honestly believe it is too early to tell whether half of the things Mobius claims to build will function and operate well. The whitepaper is broad in nature and does not go as much into ChainLink on oracle security and fault tolerance. When the Mobius testnet deploys in Q2 2018, we’ll have to wait and watch.

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