Chainlink connects smart contracts on blockchains with the real world via a decentralized oracle network.

By collecting data from multiple sources and reconciling it into one reliable piece of information, Chainlink can answer smart contract data requests using a system of nodes and operators. The Chainlink network is supported by link, its native token, which is used to compensate Chainlink network operators for providing data to smart contracts.

CHAINLINK (LINK) ESSENTIALS

Smart contracts are synchronized with real-world data via a decentralized oracle network. Connects smart contracts on the blockchain with real-world data from multiple reliable sources. Link is the native token of Chainlink, and it is used to compensate Chainlink network operators.

How smart contracts access off-chain data

For their operation, smart contracts need to access real-world data outside the blockchain. When a smart contract requires data from outside the blockchain, it uses oracles. A blockchain oracle is a piece of software that acts as an intermediary between the blockchain and the real world. The software translates smart contract requests into programming languages understandable outside the blockchain. Therefore, oracles facilitate smart contract communication with reality.

How does Chainlink Work?

When a smart contract needs off-chain data, it creates a requesting contract, which specifies what data it needs. SLA contracts (Service Level Agreement contracts) are created by the Chainlink network based on this contract. To provide the smart contract with the necessary data, this contract generates further contracts and performs all the operations required to process the request. It checks the reputation of the oracles providing the data, selects the nodes to carry out the task, and translates the request into a programming language that the oracles can understand. An answer is derived from the combined data of multiple sources, aggregation, and reconciliation. A smart contract on the blockchain receives this piece of data.

What‘s the role of Link?

Chainlink doesn't just work by itself. In a decentralized network, the task of fulfilling requesting contracts is performed by independent nodes, known as operators. Chainlink operators must be paid in order to perform their duties. Here's where Link comes in. A Chainlink operator will charge a fee in Link for the privilege of accessing data from the Chainlink network. Operators set their prices in advance based on the demand for the data they are providing and the current market for that data.

Staking on Chainlink

Chainlink supports staking as well, but it operates in a slightly different manner than we've come to expect from staking. Staking is reserved for node operators on Chainlink, who deposit funds with the network as collateral. This demonstrates their dedication to the network and qualifies them to perform operator duties and be reimbursed. The size of an operator's stake in the network is an important consideration when selecting one to fulfill a requested contract. Those who have a larger stake are more likely to be chosen and, as a result, earn links for their services. The Chainlink network penalizes faulty or dishonest nodes by taxing their stake.

How to Buy Chainlink

You can buy the Chainlink coin on Bitedenex. Sign up for a Bitdenex account and start trading LINK today!