Chainlink is a blockchain oracle network that is used to transfer tamper proof data from off chain sources to on chain smart contracts. These pricing oracles fall into the category of DeFi infrastructure and are used across all of DeFi. Chainlink is the industry leader by a wide margin in this area. Using their industry leading position they are developing other innovative tools that also fall into the infrastructure category.
In this Town Hall, Sergey Nazarov, CEO and Co-founder of Chainlink, goes into detail on the questions surrounding Chainlink recently, including speculation around how Chainlink will bring value to LINK token holders, Chainlink CCIP (Cross Chain Interoperability Protocol) which addresses the problem of cross chain communications, and Chainlink DECO which is being built as a privacy-preserving feature.
What's Next For Chainlink:
Provide all oracle use cases that protocols currently demand so that Chainlink is the primary oracle they depend on
In addition to pricing oracles, become the standard in many other oracle use cases, e.g. computation, cross chain communication
Help protocols become 50% oracle powered, 50% smart contract powered; protocols often need services that blockchains don’t provide
Continue to increase security
Continue deployment on different networks
Develop economics 2.0
Chainlink’s General Role in Crypto:
Once infrastructure is implemented, it becomes sticky e.g. COBOL servers still being used in Tradfi after decades
In many ways Chainlink has met the goal of becoming the trusted standard
Blockchains that launch with Chainlink oracle networks see a boom in Defi activity and TVL due to it being the trusted standard
No other oracle network with history of success, security, total value secured, total user base of Chainlink.
Once you are the standard, you grow as the industry grows, and people are willing to pay more for your services
What is Economics 2.0?
Relaunch of Chainlink economic system focused on reducing operating costs and increasing the fees charged to protocols using the network
Reduce costs via technical improvements, improving cloud server costs for node operators, reducing blockchain transaction fees with grants from blockchain foundations
Create easy to use payment methods for DAPPs to pay user fees which flow to the Chainlink economic system, node operators, stakers
Fees for protocols will increase alongside level of security provided, and total value secured
More revenue will flow to enhancing system security, which benefits protocols and DAPPs as well
If the issue is access to off chain oracles, chains will pay for on chain oracles
Chainlink New Services:
CCIP (Cross Chain Interoperability Protocol)
Chainlink CCIP will develop secure bridges that will draw value from less secure bridges (can help prevent bridge hacks)
CCIP beta on test net
CCIP will launch slowly
DECO is a privacy-preserving system involved with creating private ID concepts
Solving the issue of proving off chain personal ID information without putting that sensitive information on chain (HIPAA, GDPR privacy laws conflict with putting personal information on a public ledger)
Need ID to create regulated DeFi, required for increasing use cases for DAPPs
Questions/ Answers:
Other use cases for DECO?
Provides privacy preserving property, way to prove work without disclosing actual off chain data
Provides important services with immediate demand
Civil resistance to regulatory pressure
Prove ID to solve botting issues on token launches
Will Chainlink oracles enable events on one chain being able to trigger events on another chain?
CCIP:
CCIP can convey commands and messages from and to existing blockchains
Acts as abstraction layer between chains
Users will end up just using the best infrastructure for each use case e.g., if making an important or expensive transaction, may want to use ETH security
Enables computations that accelerate growth of entire new industries
Facilitate communication between blockchains and everything else
When will Tradfi entities transition from traditional contracts to contracts backed with Chainlink services?
How much urgency? Are users demanding it? Does it allow them to differentiate themselves from competitors (one use case for Tradfi institutions could be proving solvency and gaining more market share)
How many parties need to adopt the same tech? E.g. trade finance requires several parties all together, derivatives trades only need 2 parties so adoption could be easier
How digital is the industry already? Industry should already be digitised.
Finance Industry Use Case:
Finance has the urgency/ demand, often minimal amount of counter parties, and much of finance is already digitised
DTCC (Depository Trust & Clearing Corporation, settles many securities transactions) stating demand for ledger tech
Finance can rapidly bring hundreds of trillions in value including derivatives
Trust in Tradfi deteriorating, creates demand for Chainlink as a means to prove that their money is safe via a trusted oracle network
Difficult to say what industry will adopt Chainlink first because there are industries that realise potential quicker e.g. art, gaming
Finance and large gaming companies will probably adopt first
Can you expand on Chainlink as a public good? How about as a public good for broader web3 ecosystem?
Linux, TCIP, SSL etc. underpin how the world works
Chainlink can have this, and wants this world changing standard to enable earned value to flow to Chainlink participants
Rewarding Chainlink participants enables more longevity with more economic support
Becoming a public good is the greatest achievement
Crypto enables economic value accrual to important infrastructure that earns it, if implemented during early days
Sept 28-29: Chainlink will Host Main Event at SmartCon
Website: smartcon.chain.link
Experimental treasure hunt with lifetime Smartcon ticket as prize
1st clue for treasure hunt: the missing link