The Chainlink Network’s size and scope are growing exponentially. During SmartCon 2022, Chainlink Labs’ Developer Advocate Zubin Pratap presented a succinct 15-minute history of Chainlink’s oracle node software, from its humble beginnings to numerous step function innovations that gave rise to world-changing technology. The following points constitute a useful framework for understanding Chainlink’s key milestones and looking toward its future.
The Blockchain Oracle Problem: Blockchains are isolated deterministic environments that offer superior transparency and reliability for executing smart contracts. However, blockchains cannot access data from the outside world on their own. To unlock the full utility of smart contracts, blockchains need decentralized oracle networks to consume off-chain data without sacrificing transparency and immutability.
The Chainlink Solution: Chainlink’s open-source software runs on a network of unrelated nodes which provide oracle services that allow smart contracts to connect to the external data they need to unlock critical use cases like decentralized finance (DeFi).
Off-Chain Computation: As Pratap put it, “Chainlink nodes don’t just run any garden variety oracle software.” In addition to giving blockchains access to external data about real-world events, the Chainlink Network evolved to help smart contracts scale by securely performing computations off-chain at significantly reduced costs without sacrificing decentralization.
Verifiable Randomness: Because blockchains are deterministic systems, Pratap explained, acquiring random numbers on-chain used to be “infeasible and highly insecure.” In order to unlock use cases that rely on randomness, such as blockchain gaming, Chainlink developed VRF (Verifiable Random Function), an oracle service which computes random numbers off-chain before delivering the random number along with cryptographically verifiable proof of randomness on-chain.
Decentralized Oracle Networks (DONs): Pratap described a DON as “a cluster of independent unrelated nodes that do a lot of the heavy lifting” for smart contracts. This includes fetching off-chain data, performing off-chain computation, and aggregating large volumes of off-chain data into a single on-chain transaction at up to 90% cost reduction using Chainlink’s Off-Chain Reporting (OCR) protocol.
VRF v2 And Automation: Along with the next evolution of VRF, which allows smart contracts to call for many random numbers at a time, Chainlink Automation (formerly Keepers) allows smart contracts to achieve additional decentralization by automating important functions. Instead of manually triggering smart contracts through a centralized single point of failure, developers can now use time-based triggers or run custom logic to automatically update smart contracts.
Cross-Chain Interoperability Protocol: Slated for release in 2023, Chainlink’s Cross-Chain Interoperability Protocol (CCIP) is being built on an updated version of OCR to function as blockchain middleware that enables cross-chain messaging and token movement through a programmable bridge. By facilitating an interconnected blockchain ecosystem, CCIP would enable hyperconnected, composable web3 applications that achieve the user experience and functionality of essential web2 applications like Uber and Netflix.
Future Cryptoeconomic Security: Pratap emphasized Chainlink’s objective to build future-proof technology, saying, “We think in terms of forever.” In order to support the long-term scalability and sustainability of the Chainlink Network, Chainlink recently launched Economics 2.0, which includes initiatives like Chainlink BUILD and a roadmap for successive iterations of Chainlink Staking beginning with the December launch of Staking v0.1.
“We want this to be sustainable; that’s why we’re supporting the systematic rollout of cryptoeconomic mechanisms and incentives that will drive the token economics for the entire ecosystem,” Pratap explained. “Because there’s no end to how much we can scale these decentralized oracle networks.”
Watch Chainlink Labs’ Developer Advocate Zubin Pratap’s full presentation from SmartCon 2022.