Chainlink is a type of decentralization-based Oracle network that helps transfer real-world data to smart contracts on the blockchain. With it, businesses can access any major blockchain network, including Ethereum and Solana, while enabling on-chain and off-chain calculations.
A quick word about smart contracts
- Simply put, smart contracts are blockchain-based algorithms that run when certain criteria are met. They are often used to automate the implementation of an agreement so that all parties can be certain of the conclusion immediately, without the need for an intermediary or further delay.
They can also automate a workflow so that when circumstances are met, the following action is performed.
Uses and use case of Chainlink
Aggregated price feeds for digital and traditional currencies are part of the most advanced capacity. Chainlink is attracting external data providers, such as centralized and decentralized exchanges, to develop price feeds. Information from external vendors is then combined by Chainlink nodes to produce a price update impervious to manipulation. Finally, any smart contract with established access can use this pricing data. In this way, Chainlink can provide services to data consumers such as DeFi companies and data providers who can sell their data and who can use the data for smart contracts. For example, Synthetix uses the lending and lending platform to secure the total value of collateral and Chainlink to set prices on their derivatives platform.
Chainlink Use Cases
Aave is a decentralized, open source, unguarded money market system. Borrowers can access these loan pools to acquire loans, while depositors can earn income by providing liquidity to the pools.
Synthetix is based on the Chainlink Ecosystem and provides exposure to real-world assets on blockchain and specialty derivatives.
What makes Chainlink different from others?
In many ways, Chainlink is different from its rivals. For example, it is a decentralized oracle network. Oracles are off-chain sensors that are essential today. Data can be transferred to and from the blockchain using oracles.
It runs on multiple blockchains at once, unlike Ethereum. This approach allows APIs to be integrated with foreign blockchains in exchange for data feeds. It can access real-world data, payments, and events through the use of smart contracts without compromising security.
Chainlink’s competitors based on its use cases, differences, and also blockchain reliability and blockchain ease of use. Some of Chainlink’s main competitors are:
- Hyper Ledger
- Band Protocol