However, instead of a constant network “ping” for each node, this uptime will be measured as nodes digitally sign their responses and send to other nodes (for off-chain aggregation). Correctness is measured by comparing the node’s responses to the responses provided by other nodes in a given assignment. So any deviation of the node’s response outside of what the average from all node responses returned for an assignment would negatively affect this rating. Availability and correctness of nodes will be visible on-chain, meaning node listing services will be able to display these statistics publicly about all nodes on the ChainLink network. The Chainlink co-founder clarified that the platform is not trying to re-invent the wheel. Over the last years, Chainlink has established itself as the Gold standard for sourcing data to the DeFi industry.
This is the launch of the standard that could connect all of the blockchains and all of the bank chains, Sergey Nazarov said in an interview with CoinDesk. Everything here is summarized directly from the white paper, just hopefully in a way that makes it a little easier to understand. If you think this is a good idea to break down the sections like this, let me know and I’ll keep doing this. I don’t plan on going in any particular order (what fun would that be?) since much of the white paper can be read from any point as long as you have a general understanding of what ChainLink is doing.
Volatility Oracles: Unlocking New DeFi Risk Management Strategies and Derivatives Markets
According to the Chainlink team, decentralized oracle networks will see significant scalability improvements and will be able to provide their services with lower latency and higher throughput. On Thursday, April 15, oracle service provider Chainlink (LINK) released a new whitepaper with a plan of expanding into new horizons and creating next-generation decentralized oracle networks. This proposal would mean Chainlink generalizing its oracle network into a “meta-layer” of Decentralized Oracle Networks.
- “Public network infrastructure provisioning has been a core business model of telco companies for decades. Providing critical Web3 infrastructure by running Chainlink oracle nodes has enabled new revenue streams and opened the door to Web3 opportunities.”
- Finally, we characterize the properties of an ideal oracle as guidance for our security strategy, and lay out possible future improvements, including richly featured oracle programming, data-source infrastructure modifications, and confidential smart-contract execution.
- Chainlink is open-source technology that is collectively developed by a large community of developers, researchers, and users who share the goal of building Chainlink into a public good for the benefit of the entire blockchain ecosystem.
- This means that if your node goes offline for any reason, it will negatively affect its availability rating.
The new Chainlink white paper introduces a host of other features as well, notably offering a more robust incentive to report fraudulent transactions, called super-linear staking. In this mechanism, bribing a Chainlink node to provide false data becomes quadratically more expensive as more stake is committed to the network. The system relies on mathematical fraud proofs that entitle watchers to the combined stake of all nodes if they correctly report an instance of fraud. A potential attacker would need to bribe all watchers for the full amount that they’d stand to gain, an amount greatly exceeding the total stake. Additional work via adapters can also be accomplished within the node’s software, including aggregation and other computation methods.
Chainlink 2.0 Brings Off-Chain Compute to Blockchain Oracles, Promotes Adoption of Hybrid Smart Contracts
Taking the game further, now the Chainlink has released its second white paper, dubbed Chainlink 2.0 Whitepaper. A new whitepaper just released by leading blockchain oracle service Chainlink lays the foundation for new capabilities for application and smart contract developers. The contract-upgrade service is an optional service that users of the ChainLink network can choose to utilize if they wish to have security updates applied to their smart what is substratum contracts. If or when vulnerabilities are discovered, the contract-upgrade service would make a new smart contract based on the existing one, and migrate it along with its assignments to the upgraded contract. A flag (as an instruction of code) can be used to indicate use of the upgraded contract instead of the old one. All changes made by the contract-upgrade service would be visible on-chain and available for audit even before upgrading.
Nazarov disclaimed that Chainlink is not attempting to replace existing blockchains or layer-two solutions. Its aim is to be a flexible, customizable solution to compute data, which could be used to scale existing decentralized applications or even just run rollup schemes and other layer-two solutions. Chainlink would offer the choice of consensus mechanisms and nodes to each individual user, who will choose the trust guarantees they need. The reputation system will also contain on-chain history which can be publicly referenced with a listing service (and other smart contracts). This is probably the part of the Security Section that most of us are familiar with, as it defines the majority of the factors in which individual nodes are rated on (except for the two in the previous section).
Swift and Chainlink exploring how to connect financial institutions to blockchains
According to the vision outlined in the whitepaper, going forward, Chainlink plans to deploy the DONs to improve in seven key areas, such as scaling, confidentiality, trust-minimization, incentive-based security, transaction fairness, and reduction of network complexity. The Chainlink’s original whitepaper was initially designed to have DONs compute external data into a blockchain using a reliable approach. “Super-linear staking requires an attacker to have resources greater—specifically for Chainlink, quadratically greater—than the combined security deposits of all DON nodes in order to succeed,” excerpt of the announcement read. The Chainlink Community Grant will help support startups building blockchain-based solutions with UNICEF by offering funding, mentorship and access to Chainlink’s expertise. The grant’s big-picture goal is to accelerate blockchain as a force for good, especially in developing regions of the world where innovative blockchain solutions are needed most.
“Oracle networks go far beyond delivering highly validated data, they provide the various decentralized services that are combined with smart contracts to create real world outcomes. The whitepaper establishes seven key goals that DONs aim to achieve, including hybrid smart contracts, the ability to abstract away complexity, scalability, confidentiality, order-fairness for transactions, trust-minimization, and incentive-based cryptoeconomic security. These goals, and the mechanisms described to meet these goals, are explained in-depth throughout the paper, providing a large amount of technical detail as well as the reasoning behind each and every design decision. The new architecture supports a larger selection of use cases, expanding its suite of services to off-chain computation of data. In Chainlink’s vision, these computational oracles would create a class of “hybrid smart contracts” where part of the logic could be offloaded to the oracles.
What Is Chainlink? A Beginner’s Guide
The proposal would see Chainlink generalize its oracle network into a “meta layer” of Decentralized Oracle Networks. Create a reliable layer of support for smart contracts and other oracle-dependent systems by means of decentralization, cryptographic guarantees, and guardrails. Augment the capabilities of smart contracts by securely composing on-chain and off-chain computing resources into hybrid smart contracts. Availability is measured by the node’s ability to respond to messages specifically for the purpose of uptime statistics. This means that if your node goes offline for any reason, it will negatively affect its availability rating.
It does not represent the opinions of Coinfomania on whether to buy, sell, or hold any investments. Learn how to create a dynamic NFT in under an hour using Chainlink Data Feeds, Automation, and VRF in this step-by-step tutorial. Cryptocurrencies have revolutionized the financial world, introducing a new era of digital assets and decentralized transactions. Support transaction sequencing in ways that are fair for end-users and prevent front-running and other forms of value extraction by bots and exploitative miners.
Thus, DONs within the Chainlink Network serve as a secure and flexible full-stack solution for the creation of hybrid smart contracts that rely on existing on-chain code and combine it with critical off-chain computations. These hybrid smart contracts enable decentralized applications to achieve major upgrades in scalability and confidentiality, both of which are key to large-scale blockchain adoption. This growth in value derives from both economies of scale—greater per-user cost efficiency as service volumes increase—and network effects—an increase of network utility as users adopt DONs more widely. As described in the whitepaper, we believe that the growth in network security driven by virtuous cycles in Chainlink staking mechanisms exemplifies larger patterns of growth that the Chainlink network can help bring about in an on-chain economy for decentralized services. One form of attack, freeloading, is discussed in other sections of the white paper, but the certification service is focused on different types of attacks, sybil and mirroring. A sybil attack is where an attacker would control multiple nodes in the ChainLink network, attempting to control enough so that their falsified answer would be accepted as the correct answer given to a smart contract.
A node’s uptime and other reputation-based metrics act as guarantees that the node will respond accordingly. The node operators set their own prices for data retrieval and computation to be paid in LINK tokens. Based on this initiative, the new architecture will serve as a secure off-chain computation layer that partially relies on blockchains for security, but operates with the scalability of off-chain systems. Oracle-based computation to assist certain blockchain transactions are not entirely new, with Chainlink being the most notable provider of specialized data. Recently, the Maker team also proposed using its oracle for a similar purpose by instantly verifying the validity of an Optimistic Rollup and facilitating instant withdrawals from layer two through Dai. Use decentralization, trusted nodes, premium data, and cryptographic proofs to connect highly accurate and available data/APIs to any smart contract.
The practical uses of such a network will largely depend on what the users wish to do, but Chainlink expects a number of services to take priority. The idea behind the platform is to let the oracles compute a “fair” sequence of transactions that would minimize value extraction generated from front-running trades and other techniques. As Nazarov explained, blockchains don’t have a conception of time, which is part of the reason why ordering transactions fairly is difficult, and why oracle networks can help.
The new off-chain layer will rely on the blockchain for providing secure and tempered proof operations, and all this will be done with the feature-rich and connected capability of the off-chain systems. This is expected to serve a wide variety of customers and clients by providing a novel and rich user experience through the range of new applications. Ensure decentralized oracle networks achieve the latencies and throughputs required by high-performance blockchains, layer-2 solutions, and Web2 systems.