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Chainlink Data Providers Explain Why Hybrid Smart Contracts Demand High-Quality Data

As the industry-standard decentralized oracle network, Chainlink provides developers with the largest collection of reliable, high-quality data sources to power advanced hybrid smart contracts that are resistant to market challenges like flash loan attacks. This requires close collaboration between Chainlink and the data providers that curate and securely deliver data throughout the Chainlink network. 

At this year’s SmartCon #1, Chainlinks Labs’ Head of Data Products, Yaser Jazouane, moderated an elucidative panel discussion about Why Data Quality Matters To Smart Contracts with representatives from data providers in the Chainlink network: dxFeed Board Advisor John Willock, Everest CEO Bob Reid, Agryo CEO Isaque Eberhardt, CryptoCompare Head of Sales Maximillian Engelen and Tiingo Inc. Founder and CEO Rishi Singh.

Right off the bat, Reid captured the crucial importance of high-quality data for Everest, a global banking and digital ID platform that launched its own Chainlink node to securely feed KYC, AML and KYB data to smart contracts across multiple chains, describing the platform’s commitment to securing good data as something akin to “religious fervor.” 

Willock said that for dxFeed, a traditional market data provider that’s paving the way for next-generation financial products by providing datasets to Chainlink nodes as well as operating its own node, data quality comes down to two things: transparency and reliability.

Where there are billions of dollars at stake, Willock said, “One wrong tick of data somewhere could be a very significant problem.” Therefore, the methodology for creating an index should be open-source, so that it’s both resistant to market manipulation and reproducible to a very high degree of precision. This, Willock emphasized, is incredibly important as DeFi’s TVL approaches $100 billion.

Engelen highlighted how the Chainlink network selects for the most reliable node operators, because consistently accurate and reliable data is crucial to vital smart contract functions like liquidation mechanisms. “Being reliable is literally the name of the game for a market data aggregator,” he said. 

Eberhardt spoke to the critical importance of cryptographically verifying data provenance when it comes to risk analysis. Agryo operates a Chainlink node to make its agri-finance data available on-chain for the consumption of environmentally-focused blockchain-based financial products. By documenting every step of the process and methodology of producing data on-chain, Agryo makes its data verifiable to anyone at any time. 

“It’s completely different from anything you can see in the market today in terms of traditional finance,” Eberhardt said. In his view, cryptographically verified data provenance eliminates “noise” and “mistrust” to enable decentralized insurance products for farmers in developing regions of the world. “We are talking about a market where a farmer is 100km away from a bank and nobody knows him,” he said.

Chainlink Today contributor Rishi Singh said that being able to deliver Tiingo’s data on-chain as a Chainlink node operator is “very important” from the perspective of enabling DeFi. Beyond this, he spoke to the profound implications of immortalizing historical data on-chain while lowering the cost of distributing this data. “We pay gas once and that data is written for everybody,” he said. 

Willock echoed Singh, saying, “I think a lot of the business process of delivering data so far in the traditional universe is ripe for change.” In his view, decentralized oracle networks like Chainlink can improve or reinvent complex, high-friction, high-inefficiency processes and create new opportunities for monetization. “It’s very exciting,” he said. 

Engelen said the Chainlink network is a “gateway” for data providers to connect with developers and understand which datasets are in high demand. “Now that Chainlink’s going multi-chain, we very much look forward to meeting even more developers,” he said. Reid agreed, saying Everest’s participation in the Chainlink network’s “exponential” reach is “probably going to be the most important thing we do.” 

Watch the full SmartCon panel discussion with Chainlink data providers.

Explore other presentations from Smart Contract Summit #1’s playlist.

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