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Expanding Chainlink’s Reach As A Web3 Services Platform

Having enabled more than $7 trillion in transaction value throughout the web3 economy, Chainlink is the industry-leading decentralized oracle network for delivering real-world data on-chain. Over the past few years, the Chainlink Network has expanded to comprise more than 1,000 bespoke oracle networks, each of which provides a unique decentralized data feed or service. 

Recently, Chainlink co-founder Sergey Nazarov joined Google web3 community lead Marlon Ruiz for a fireside chat about how Chainlink has become a comprehensive web3 services platform. Nazarov chronicled the evolution of Chainlink – from the birth of the first oracle, to the generation of consensus through decentralized oracle networks, to the application of trust-minimized consensus beyond decentralized finance (DeFi). 

He traced his understanding of oracles as an essential and “very obvious component of a smart contract” back to 2014.

“For me, the idea of a smart contract was a connected, hyper-reliable automation engine,” he said. Just as smart homes are connected, automated homes and smart cars are connected, automated cars, Nazarov defines smart contracts as connected, automated contracts. “If you think about the semantics of smart contracts, it makes sense,” he explained.

Because they run on blockchains, which are inherently isolated and deterministic environments, smart contracts require a decentralized oracle network to generate consensus about “everything else” beyond private keys and token ledgers.

“That’s where the idea of an oracle network was born,” Nazarov said. “It was born out of this desire to not only provide data or information, or inputs or even outputs, but to provide it in a way that the inputs and outputs could be guaranteed close to or at the same level as the smart contract’s state. Because only then would you really make something that was truly reliable in this cryptographically guaranteed manner that we were seeking to create.”

He described DeFi as the “state on a blockchain and oracle network consensus about data combined” to make decentralized financial products that transcend “the reach of certain failure modes” through higher degrees of transparency and risk management compared to centralized financial products.

“This consensus mechanism is applicable to many things beyond market data and DeFi,” he continued. Through a growing array of decentralized services such as Proof of Reserve, Automation, VRF (Verifiable Random Function), and the recently-launched Functions, which aims to bridge the gap between web2 and web3, Nazarov said Chainlink has matured into a full-service web3 development platform for burgeoning industries like decentralized insurance and web3 gaming. 

“The reason Chainlink is a web3 services platform is because it’s not just about data,” he explained. “It’s about basically all the compute and all of the connectivity that you could want in a trust-minimized form. And trust-minimization is really this method of making sure that the system is beyond the control of others and beyond certain failure modes.”

Watch Sergey Nazarov’s fireside chat with Google’s Marlon Ruiz.

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