Chainlink: Beyond Price Feeds and Data Delivery

  • Price Feeds — Chainlink’s pre-built decentralized price feeds provide DeFi applications a real-time stream of financial market data, including exchange rates for cryptocurrencies, stablecoins, commodities, indices, stocks, fiat currencies, and other key financial datasets.
  • Any Web API — Chainlink oracles are able to connect smart contracts to any open or authenticated API, opening up access to IoT data, bank payments, web APIs, enterprise systems, other blockchains, and virtually any off-chain resource used to create smart contract markets in insurance, supply chain, digital marketing, and various other new industries.
  • Verifiable RNG — Chainlink VRF (Verifiable Randomness Function) generates a secure source of on-chain randomness that users can independently verify as fair, unbiased, and tamperproof, leading to gaming applications, NFTs, blockchain lotteries, layer-2 protocols, and more that can reliably secure large amounts of value with RNG inputs.
  • Off-chain Computation — Chainlink oracles can perform more advanced off-chain computations, leading to an expansion in oracle services such as scalable Solidity computation, blockchain transaction privacy, oracle data privacy/integrity, transaction order fairness, and more.
  • Blockchain Abstraction Layer — Chainlink’s continued integration across all the leading blockchains that exist now and in the future, provides enterprises, governments, and data providers with a single integration gateway to connect applications and sell data to every blockchain network, reducing development costs and preventing vendor lock-in.

A Framework for Building Heterogeneous Oracle Networks

Before diving into each category, it’s important to emphasize a few key points about the structure of the Chainlink Network that allows it to offer such a diverse array of oracle services simultaneously. Unlike blockchains, which operate as a single monolithic network with a single consensus mechanism, the Chainlink Network is decentralized, made up of numerous independent oracle networks running the same software but operating entirely independent from one another.

Taken from a recent Chainlink Node Operator article, it shows how each oracle network operates completely separate from each other oracle network.
  • Who and how many independent oracles are involved
  • Where oracles source data from and what computation the oracle network performs
  • How data is secured and the frequency at which it’s provided on-chain
  • And various other important parameters.

The Progression of Oracle Services Enabled by Chainlink

As a direct result of this high level of generalization and horizontal scalability, the Chainlink Network is able to provide a diverse range of oracle services from relatively simple to much more advanced. We hope to shed a light on these different oracle services and show how Chainlink is already providing several of them today on mainnet to secure real value.

Price Reference Data Feeds

The first and most widely used oracle service the Chainlink Network provides is Price Reference Data Feeds, which power a significant portion of the Decentralized Finance (DeFi) ecosystem. Chainlink’s price feeds are built as a shared public resource funded by multiple projects to lower the per-user costs. These feeds operate under a pull model (synchronous), where price updates are triggered on a regular cadence (deviation threshold and/or heartbeat) to keep the price feeds fresh without requiring users to monitor and initiate updates. Each price feed update is stored within a corresponding on-chain reference contract, enabling smart contracts to fetch the latest (or historical) price point atomically within a single transaction at any time.

Chainlink’s widely used ETH/USD price feed oracle network

Any Web API

The next major oracle service that Chainlink already provides, which will only accelerate in usage, is the ability to connect smart contracts to any off-chain web API. The scope of this feature cannot be understated as it not only permits smart contracts to receive data inputs from any off-chain system, but it also allows smart contracts to generate outputs that affect external systems in the real world. These oracle networks typically operate as a push model (asynchronous), where a smart contract makes a direct data request to Chainlink nodes within one transaction, and directly receives a response shortly after within another transaction. This provides a method of getting data delivered on-demand directly to a single smart contract and/or setting up a specific cadence of data delivery customized to the smart contract’s unique data requirements (could set up their own synchronous reference data feed too).

Any input, any output, on any blockchain
  • Weather data
  • IoT sensors
  • Sport scores
  • Gaming results
  • Credit ratings
  • AML/KYC info
  • Election results
  • Traditional payment rails
  • Interbank transfers
  • Enterprise ERP/CRM backends
  • Smart locks for rentals
  • Transactions on other blockchain networks

Verifiable Randomness

Decentralized applications are automated in the sense that they move large amounts of money directly based on the inputs they receive. One of the most critical inputs for many applications that may not be immediately obvious is a tamper-resistant source of randomness, which is derived from a Random Number Generator (RNG). For example, minting a unique in-game artifact or selecting the winner of a lottery requires a source of randomness.

Additional Off-chain Computations

While Chainlink is widely known for its ability to aggregate and deliver data on-chain, Chainlink can also perform a more advanced set of off-chain computations for smart contracts. Such computations provide smart contracts with robust solutions for achieving scalability, privacy, ordering fairness, data refinement, interoperability, and more. Smart contracts can simply offload more expensive computations to the same off-chain oracle networks already being used for data sourcing and delivery, creating a one-stop-shop for retrieving off-chain data inputs, triggering off-chain outputs, and leveraging additional off-chain computations.

From Chainlink’s blog on Fair Sequencing Services: Enabling a Provably Fair DeFi Ecosystem: “Fair Sequencing Service with mempool monitoring. Users send two transactions, T1, followed by T2, to the contract SCON. The oracle network observes the two transactions, orders them by time of arrival in the mempool, and forwards them to SCON.”
  • Fair Sequencing Services (FSS) — Order blockchain transactions fairly before they are mined as blocks, effectively leveraging Chainlink oracles to mitigate frontrunning and Miner-Extractable Value (MEV) issues on blockchains, also resulting in lower gas costs.
  • Arbitrum RollupsOperate as validators for layer 2 Rollup chains, allowing Chainlink oracles to execute solidity smart contracts off-chain in a scalable and trust-minimized manner via fraud proofs and staking.
  • Mixicles — Create on-chain privacy by monitoring the execution of a smart contract and triggering its settlement on a mixer based on that input, effectively using Chainlink oracles to decorrelate the contract's inputs from its outputs.
  • DECO — Generate zero-knowledge proofs (ZKPs) on off-chain data, enabling users to prove sensitive facts about TLS web sessions to Chainlink oracles without revealing the data or requiring server-side modifications.
  • Town Crier — Utilize a trusted execution environment (Intel SGX) to process data in a black box computing environment, providing Chainlink oracles with the ability to offer a wide variety of secure, high-throughput, and confidential computations (even to the oracle itself).

Blockchain Abstraction Layer

The Chainlink Network not only provides smart contracts with the ability to access any off-chain data resource but its blockchain agnostic properties mean that it can be used by enterprises and data providers as a single gateway to interact with any blockchain and DLT network.

Conclusion

While some may only see Chainlink as a means of getting price feeds, appearances can be deceiving as there is far more below the surface than meets the eye. Chainlink’s expansive set of capabilities requires us to rethink how we define blockchain oracles, as they are clearly more useful than simple data transfer. In the same vein, we must reimagine just how expressive oracles are in terms of the data and services they can provide, likely being the greatest catalyst to building more advanced smart contract applications that go far beyond what we think is possible today.

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SmartContent

SmartContent

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Breaking down the information asymmetry on Chainlink, smart contracts, and the cryptocurrency ecosystem. Founded by The_Crypto_Oracle and ChainLinkGod