What is Chainlink?
Chainlink is a network of oracles. An oracle is a service that brings information from outside a blockchain, such as asset prices or weather data, into smart contracts that cannot reach the internet on their own.
Chainlink was founded by Sergey Nazarov and Steve Ellis, and its first whitepaper was published in 2017. The LINK token was launched that year, and the network went live on Ethereum in 2019. Chainlink Labs is the main company developing it.
How does it work?
Chainlink does not run its own blockchain. Instead, independent computers called nodes collect data from many sources, combine it and deliver the result to smart contracts on different blockchains. Using several nodes and sources makes it harder for one faulty or dishonest party to feed in bad data.
Node operators are paid in LINK for their work. LINK can also be staked, meaning locked up, to help secure some Chainlink services, and staked LINK of node operators can be cut if they fail to deliver. LINK is a token on Ethereum and has bridged versions on other networks.
What is it used for?
Chainlink services are used for:
- Price feeds that DeFi lending and trading apps rely on
- Moving tokens and messages between different blockchains
- Verifiable random numbers for games and NFT draws
- Paying node operators and staking, using LINK
Many DeFi apps rely on Chainlink price feeds, so the network is an important piece of shared infrastructure. Using a Chainlink service does not always mean an app holds LINK.
Key facts
- Launched: 2017 (token); network live on Ethereum in 2019
- Founders: Sergey Nazarov and Steve Ellis (Chainlink Labs)
- Consensus: none of its own; LINK runs on Ethereum, which uses proof of stake
- Blockchain: a token on Ethereum (ERC-677), available on other networks too
- Supply: fixed at 1 billion LINK, all created at launch
Explainer written by Finvane from official project documentation. It is not investment advice.