CHAINLINK -Review Feb 2020

ChainLink $LINK

$1bil Market Cap

Volume: LATOKEN, BitForex, Binance
Liquidity: Coinbase PRO, Bithumb, Binance
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ChainLink uses the blockchain to connect smart contracts to real world data, events, and payments.  This sounds relatively simple but it’s something that few other projects have been able to accomplish.

The Chainlink network provides reliable tamper-proof inputs and outputs for complex smart contracts on any blockchain by using decentralized oracles.  The oracles are how ChainLink is able to create this secure and fully decentralized system based on blockchain technology.

Oracles are third-party services managed by centralized entities, and are therefore not required to use the consensus rules of the blockchain itself. This creates a situation where these centralized entities may be able to report incorrect or malicious data. If incorrect information about a stock price is transferred to the blockchain, the smart contract may perform an incorrect function based on this return of information.

ChainLink intends to solve this problem by creating a fully decentralized network of oracles, where smart contracts can safely interact with external sources. Any owner of a data channel, API, etc. will be able to transmit information to the Chainlink network, receiving a reward for this in the system’s own tokens where it is found to be legitimate.
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ChainLink was built over Ethereum and launched it’s mainnet in June 2019.  The ICO ran in late 2017 where 35% of the tokens were up for grabs to investors at a price of $0.11USD/LINK.
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The steady performance since it’s inception has allowed it to rise to a price of over $2.80 at the time of reporting.  This rise was well documented during the long down turn of late 2019 where vs Bitcoin it made headlines losing less when Bitcoin was losing and gaining more when Bitcoin was rising.  During this time ChinaLink earned titles like “The Best Performing Crypto of 2019”.

By Aug 2019 ChainLink had recorded over a 800% gain in value.  This was back by some of largest and most meaningful partnerships Cryptocurrency and blockchain have seen in some time.
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As the start of an impressive but incomplete list, let this digest for a minute.

The image (source CryptoDiffer) offers a visual representation off January 2020 and then the list provides dated partnerships over the last several years.

For details on EACH and a link to the source please click this text and read what and how each of these partnerships bring strength to the ChainLink project.

  1. Credits -July 2019
  2. Oracle -June 2019
  3. V Systems -June 2019
  4. DApps Inc -June 2019
  5. Google Cloud -June 2019
  6. Matic -June 2019
  7. GoChain -June 2019
  8. Reserve -June 2019
  9. Harmony -June 2019
  10. Shyft -May 2019
  11. Hedera Hashgraph -May 2019
  12. IOST -May 2019
  13. Streamr -April 2019
  14. Ocean Protocol -April 2019
  15. Synthetix -March 2019
  16. Provable -March 2019
  17. Celer -February 2019
  18. STK -December 2018
  19. Mobilum -December 2018
  20. ETHA -December 2018
  21. Kaiko -November 2018
  22. Wanchain -November 2018
  23. Hydrogen -November 2018
  24. bZx -November 2018
  25. Morpheus Network -October 2018
  26. Web3 -October 2018
  27. GameDex -September 2018
  28. OpenLaw -August 2018
  29. OpenZeppelin -December 2017
  30. ClinTex -July 2018

BET Protocol -January 2020
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The question must be asked then, “Is ChainLink a corner stone of the Ethereum’s DeFi success?”

The ChainLink team analyzed their current product and the others in development to attempt to answer this question in a January 2020 blog post.

The most obvious answer is “yes, it could be” and that’s based solely on their core product.  As the middle man of data for on chain and off systems they open the world to the opportunities the Ethereum blockchain has already proven it is ready to provide.  Without this link creating this much needed interoperability, this would never happen.  But let’s look closer.
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The data moved (even in the real world) comes at a cost, and in a decentralized system that cost is much more evident.  ChainLink is working to implement threshold signatures in the ChainLink protocol.  These will help to eliminate multiple charges within the aggregation protocol.

Along the same lines as cost, privacy is also desired and again, will most often lead to higher costs of transactions. 

In the blog post Chain Link says:

“Most contracts in the real world simply cannot happen without privacy.” The lack of on-chain privacy outside of more expensive Zero Knowledge Proof (ZKP) designs means that many contracts cannot be redesigned as potentially more efficient smart contracts. Privacy is essential for concealing internal positions and trading strategies, as well as abiding by data privacy laws and regulations.”

While there are already options to use like TEE-based oracles. 

:A TEE is a hardware-based capability that allows programs like Town Crier to run in a protected environment. This environment, called an enclave, provides both integrity and confidentiality.  Integrity means that it’s infeasible for an attacker to tamper with the code in an enclave. It ensures users that TC is acting as an honest oracle.”

As stated above, TEE-based oracles can be used to hide oracle queries from the oracle itself, removing the possibility of them leaking sensitive information (assuming you trust the hardware).  This will work in many situtations but the ChainLink team has also seen the need for another type of privacy to help support growth in the very sensitive world of decentralized finance and data.
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“Mixicles” are that next level.  These will use oracles to create privacy by breaking down the correlation between inputs and outs of a smart contract.  Essentially the data is confirmed off chain, where it is then sent to a mixer that will issue designated outputs based on that oracle input.  The concept is another level of privacy that can be used on combination with TEE-based oracles to offer a deeper level of privacy where needed.
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ChainLink believes that the idea of data transfer between the traditional world and the blockchain ecosystems is finally at a resolution.  While not perfect and improving on the base protocol this leaves many wondering where they take this technology next. 

As the currenct wave of decentralized finance is sweeping Ethereum and the blockchain space they look to their success to build out additional products and solve the core problems of connectivity, trusted data, low-cost scalability, and transaction privacy currently holding back a larger wave of DeFi development.

There are no other teams in the blockchain space that have made signed as many partnerships, solved the desperate need for interoperability with real world data, and developed a usable and in demand product to back it all up.  As far as real world impact and adoption, it would be a struggle to find a competitor within the Ethereum ecosystem or even the blockchain space as a whole.  The future limits of what will be built by, with and on ChainLink are mind bending and at this still very early stage in development, it is an exciting time to be a part of it all.  

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