Chainlink is a decentralized blockchain oracle network built on Ethereum.[3][4] The network is intended to be used to facilitate the transfer of tamper-proof data from off-chain sources to on-chain smart contracts. Its creators claim it can be used to verify whether the parameters of a smart contract are met in a manner independent from any of the contract's stakeholders by connecting the contract directly to real-world data, events, payments, and other inputs.[5]
 | |
| Denominations | |
|---|---|
| Plural | Chainlink |
| Code | LINK |
| Development | |
| Original author(s) | Sergey Nazarov, Steve Ellis, Dr. Ari Juels[1][2] |
| White paper | chain |
| Initial release | May 30, 2019 |
| Code repository | github |
| Written in | Solidity, Go |
| Operating system | Blockchain-agnostic |
| Source model | Open source |
| License | MIT License |
| Ledger | |
| Supply limit | 1,000,000,000 |
| Website | |
| Website | chain |
History
Chainlink was created in 2017 by Sergey Nazarov and Steve Ellis,[6] who co-authored a white paper introducing the Chainlink protocol and network with Cornell University professor and former Chief Scientist of RSA Ari Juels the same year.[1] The first Chainlink decentralized oracle network (DON) was formally launched in 2019.[7]
In 2018, Chainlink integrated Town Crier, a trusted execution environment-based blockchain oracle that Juels also worked on. Town Crier connects the Ethereum blockchain with web sources that use HTTPS.[8]
Chainlink's trademark was registered in the Cayman Islands on March 12, 2019, the corporation created being Smartcontract Chainlink Sezc, Ltd.[citation needed]
In 2020, Chainlink integrated DECO, a Cornell project co-created by Juels. DECO is described by its authors as a protocol that uses zero-knowledge proofs to allow users to prove information is true to a blockchain oracle without revealing sensitive information, such as birth dates.[9] Chainlink published a second white paper in April 2021. That paper, Chainlink 2.0: Next Steps in the Evolution of Decentralized Oracle Networks, detailed a vision for expanding the role and capabilities of decentralized oracle networks to include hybrid smart contracts, which utilize on-chain code and off-chain services provided by oracle networks.[10]
Swift
Interbank messaging system Swift and Chainlink announced in 2023 that they had successfully transferred tokenized value across multiple private and public blockchains.[11] The industry collaboration involved more than a dozen major financial institutions including Australia and New Zealand Banking Group Limited (ANZ), BNP Paribas, BNY Mellon, Citi, Clearstream, Euroclear, Lloyds Banking Group, SIX Digital Exchange (SDX), and The Depository Trust & Clearing Corporation (DTCC). Chainlink was used as an enterprise abstraction layer to securely connect the Swift network to a blockchain network, while Chainlink’s Cross-Chain Interoperability Protocol (CCIP) enabled complete interoperability between the source and destination blockchains.
DTCC
In 2024, DTCC announced a Smart NAV pilot with Chainlink and 10 market participants, including American Century Investments, BNY Mellon, Edward Jones, Franklin Templeton, Invesco, JP Morgan, MFS Investment Management, American Trust Custody, State Street, and U.S. Bank.[12] The pilot centered around providing the capability to make trusted, verifiable data available on (virtually any) blockchain network(s) for on-chain use cases such as tokenized funds. DTCC served as the provider of Net Asset Value (NAV) data, while Chainlink’s CCIP served as the interoperability layer. The pilot demonstrated CCIP’s ability to serve as an abstraction layer between DTCC and the potentially infinite number of blockchains.
ANZ
ANZ, one of Australia’s “Big Four” banks[13], announced in 2023 that it worked with Chainlink to complete a test transaction to simulate the purchase of a tokenized asset, facilitated using an ANZ-issued Australian-dollar-denominated stablecoin A$DC and an ANZ-issued NZ-dollar-denominated stablecoin.[14] This transaction involved technical integration of ANZ’s digital asset services technology stack with CCIP to realise cross-chain settlement of tokenised assets securely and efficiently.[15]
Technology
Chainlink's decentralized oracle network is an open-source technology infrastructure that allows any blockchain to securely access external data, trust-minimized off-chain computations, and cross-chain interoperability. Chainlink is not a single monolithic network but a heterogeneous network made up of any number of independent decentralized oracle networks running in parallel. [16]
A decentralized oracle network consists of nodes that run oracle software used to fetch, compute upon, validate, and deliver data from multiple sources onto blockchains, with the aggregated data points then used to execute smart contracts.[17] Enterprises that run Chainlink nodes within decentralized oracle networks include Vodafone, Google Cloud, Swisscom, and Deutsche Telekom’s T-Systems.
The Chainlink platform has multiple distinct oracle services running in production, including the Cross-Chain Interoperability Protocol (CCIP), Data Streams, Data Feeds, Proof of Reserve, Functions, Automation, and Verifiable Random Function (VRF).
CCIP
Chainlink launched the Cross-Chain Interoperability Protocol (CCIP) — a technology designed to enable cross-chain connectivity across both public and private blockchains.[18] CCIP supports the ability to send messages, tokens, or messages and tokens simultaneously in a single transaction, referred to programmable token transfers.[19]
CCIP enables cross-chain lending applications, allowing users to deposit collateral on one blockchain and borrow assets on another, as well as cross-chain data storage, liquid staking, and gaming apps between multiple chains.[20] CCIP has also been used for blockchain abstraction, wherein financial institutions can use existing infrastructure and messaging standards to interact with tokenized assets across blockchains through CCIP’s blockchain abstraction layer.[21]
CCIP includes the Risk Management Network, which provides an additional layer of security by continually monitoring and validating the CCIP network’s behavior, serving as an independent check on cross-chain operations for possible errors.
Data Streams
Chainlink Data Streams is a data oracle solution that combines low-latency market data and automated execution to enable high-speed, user-friendly DeFi protocols.[22] Low-latency market data refers to financial market data that is delivered in near real-time to market activities.
The product uses a "pull-based" data oracle solution, where high-frequency market data is continuously made available off-chain where users can retrieve them and then validate them onchain. This differs from the push-based solution where oracles proactively feed data to smart contracts at time or price deviation intervals.[23]
Data Feeds
Chainlink Data Feeds provide a decentralized source of off-chain data to power smart contract use cases. Chainlink Data Feeds are the most widely used price oracle solution in decentralized finance (DeFi), providing market data such as asset prices to help smart contracts facilitate key functions. DeFi liquidity protocol Aave uses Chainlink Data Feeds when issuing loans and to determine if loan positions are under-collateralized and therefore should be liquidated.
Proof of Reserve
Chainlink Proof of Reserve relies on a decentralized oracle network for automated onchain data feeds that relay information about the collateral backing various onchain tokenized or wrapped assets. Depending on the use case, Chainlink provides feeds from onchain data or third-party off-chain attestations. According to Messari, Chainlink Proof of Reserve adds a new layer of transparency to crypto and can be used in development to help secure DeFi protocols and collateralized assets represented onchain.[24]
Bitcoin ETF issuer, 21Shares, announced they integrated Chainlink Proof of Reserve to publish holdings data on Ethereum mainnet in a step taken toward increased transparency for its spot Bitcoin ETF ARKB.[25]
Functions
Chainlink Functions is a self-service, serverless platform to help developers connect their decentralized applications or smart contracts to any Web 2.0 API.[26] Functions enable developers to use any data source of their choice, ingest it into Functions, and then define the code they wish to compute the data source with.[27]
Telefonica launched with Chainlink Functions to provide developers access to their OpenGateway and SimSwap protection API, which can be used as 2-factor authentication for blockchain transactions.[28]
Automation
Chainlink Automation is a smart contract automation service that reliably executes smart contract functions using a variety of triggers, such as based on a time schedule, custom logic, or a log trigger. Automation can be combined with other services, such as Data Streams, to automatically publish oracle data onchain to settle DeFi transactions.
VRF
In addition to the transfer of external information to a blockchain, Chainlink can also be used for several different off-chain computation functions, including a verifiable random function (VRF). Chainlink VRF can be used for random number generation, which is used in decentralized gaming.[29] ZDNet reported the verifiability of the random number generation ensures the in-game results are tamper-proof.[30] [31]
Since its launch, Chainlink VRF has become the most widely adopted random number generator solution in the blockchain industry, fulfilling more than 3 million request transactions and currently providing verifiable randomness to more than 2,200 unique smart contracts across multiple blockchain networks. Popular blockchain projects like Bored Ape Yacht Club, Axie Infinity, Ethercards, and more have relied on Chainlink VRF for randomness.[32]
Link token
Node operators are compensated with the network's native cryptocurrency, LINK.[16] Chainlink's LINK token is an ERC677 token, an extension of ERC-20. All LINK tokens have been premined and largely withheld by the central issuer. A fraction of the pre-mined token supply was offered for sale to retail buyers in a controversial and legally murky initial coin offering (ICO). Tokens act as data payloads, feeding the required data from off-chain sources to smart contracts, which then act accordingly in response to the data provided by the token.[33] According to Chainlink, the trade value derived from these tokens is used to pay node operators for retrieving data from smart contracts, and also for deposits placed by node operators as required by contract creators. Tokens can be stored in any ERC-20 wallet, as the ERC677 token retains all the functionality of an ERC-20 token.[34][35]
References
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