Jordan Cueto

Chainlink Review There’s no secret about it: companies are adapting to blockchain not because of cryptocurrency’s value but because of the latent potential of blockchain as a technology for transactions. This shift from being a buzzword that drives the market value of coins towards a true and tangible technology with many use-cases is supported by the widespread growth in global adoption for blockchain as a core technology for many business infrastructures. Chainlink claims that it is aiming to improve smart contracts as they are. Typically, a smart contract allows parties to do automated transactions under a set of pre-established rules that the involved parties agree to. The problem lies in transactions that involve parties outside of those who agree ­– Chainlink addresses this issue by creating a platform that connects the internal parties (those who have agreed to the smart contract’s specs) and the external parties (those who are involved indirectly with the transaction ie: regulating bodies and organizations). Dubbed as “Oracle,” Oracle serves as an intermediary between smart contracts that ensures the validity of data. One of blockchain’s problem is that it only ensures the validity of data after it was encrypted but completely disregards all the transactions (or off-chain data) before the encryption. This is problematic as transactions do not only happen from one entity to another. As an example, a typical FMCG manufacturer would have to go through the transport organizations, manufacturing companies, and sources of raw materials before they come up with the final product and each process found within each exchange of good affects the validity of the goods. Oracle’s premise is simple: it integrates with existing external APIs and ensures the validity of data by cross-referencing it with the data found within the API. For example, an oracle can integrate with sports analytics to facilitate the validity of bets encrypted in the blockchain. Companies are showing intention for adoption to blockchain’s decentralized system even amidst the global cryptocurrency bear market. Chainlink recognizes this as a business opportunity and offers their technology to serve as the bridge between businesses and blockchain ­­– a technology that they dub as the oracle. Oracle allows businesses to do a full transition without changing anything in their existing infrastructure and established workflows – a huge plus considering that a full blockchain transition usually involves a lot of retooling, reskilling, and re-educating for the whole company and would usually take a long time. Technical details  Chainlink’s solution is to create a network of oracles that can specify data from point A to point B. For example, a smart contract based on stock market prediction would require the real-time movement of stocks from exchanges. This is supplemented a technology called Intel Software Guard Extensions (SGX) that creates an encompassing ecosystem that does not allow alterations of changes, keeping the oracle networks a high level of authenticity. Some example of possible use-cases for oracles and smart contracts (Upamanyu Acharya of fynetuff.com, 2018): Price lists and tax lists in realtime Automation of payment on metric-based parameters (employee compensation for good work performance) Automation of insurance payments disasters/accidents Event-based scheduling of contracts (payroll automation during specific days of the month) Expiration or creation records (proof of deliveries and invoices for supply chain, operations, etc.) Chainlink’s tokens (LINK) are generated as compensation for oracle operators which is a massive opportunity considering that their platform relies on multiple networks of oracles working together to verify and secure data. Roadmap Chainlink’s team comprises of experts that have been in the scene as early as 2008 operating under its parent company, SmartContract.com. Headed by Sergey Nazarov as its CEO with his experience on FirstMark Capital and selected by names like Gartner, VentureBeat, and CoinDesk as a leader in the blockchain space with their use-cases for oracle, ChainLink prides itself as a project that wields experience and insight in the cryptocurrency and blockchain space. Chainlink is one of the most established projects in the crypto space right now. Their whitepaper is concise and tackles the simple yet crucial element of adoption which is a huge concern by both those inside and outside the blockchain space. Overall the marketing is not that stellar, but it is to be expected as they really have focused on what their product can do for the business and surprisingly, the whitepaper and its huge roster of experienced individuals is enough to establish Chainlink’s selling points. A testament to this is their partnership with SWIFT, one of the largest bank wire systems on the planet, for a project to develop a Proof of Concept (POC) for Chainlink’s system. Their ICO was completed back in September 2017 with a strong marketcap at $104 million USD that yielded a staggering ROI at 300% for ICO investors. Chainlink’s market is strong considering that a huge bulk of the price movement is correlated with both BTC and ETH. On-chain overview Currently there are: Holders: Approximately 22,495 addresses as holders Tokens: 1,000,000,000 tokens. A weekly DAU at 58 and a monthly at 74 The token exists to provide a monetary incentive for the ChainLink network to do its job well. This is supplemented by a reputation system, bidding system, and a decentralized network that relies on independent stakeholders and service providers to ensure that their data is trustworthy verified by layers of independent sources. In summary, ChainLink removes problematic nodes and rewards those who have a reputation as honest and trustworthy. You can read their whitepaper for a more concise explanation of the reputation system. Project Weakness and Competitor Overview One of the flaws of this project is also its greatest strength: Oracle. Oracle is not a perfect tool especially for verifying source data that is susceptible to risks outside of blockchain i.e. mismanagement, flawed methodologies, and general human errors. Up to this day, no amount of data gathering can truly verify information from a single point of origin and that still holds true for smart contracts and blockchain even with oracle added to the fold. Still, an oracle is still a must for any dApp that will rely on off-chain data. This is supplemented by the fact that there are also many competitors that use oracle such as: Microsoft Coco: hosted by none other than Microsoft Azure itself which is already enough as a testament to its sustainability and experience. Being a Microsoft product, it will be a strong competitor due to its innate ability to integrate seamlessly with existing systems – which is ChainLink’s premise in the first place. Hivemind: developed as a Bitcoin sidechain, it utilizes Bitcoin smart contracts and uses a similar reputation system to provide validity using consensus with its Votecoin. Very similar to ChainLink. Corda: Perfect for companies already using R3 corda for their blockchain ecosystem which makes it have a solid foothold not only in blockchain projects that offer oracle as a solution but in the entire crypto-space in general. With a subtle marketing and solid use-cases, Chainlink looks like a solid albeit a bit risky investment especially for those who are new to the cryptocurrency space. They are banking hugely on their CEO and their partnerships like their project with SWIFT which is both good and bad: on one side it showcases that it is a technology that is usable in a real-world scenario but on the other hand that one unfortunate event can also tip the scales negatively. For more insights on cryptocurrency and blockchain in general, stay tuned at (insert CTA here)