During a fireside chat at the 2021 Global DeFi Summit, Chainlink Co-founder Sergey Nazarov and Real Vision Crypto Editor Ash Bennington distilled the essence of oracles. Bennington offered a simple definition:
“When I explain oracles to my mother, I say that oracles are the things that fundamentally connect the blockchain to the real world.”
On today’s in-depth episode of Real Vision, Bennington and Nazarov further explored the nature of oracles and how they interact in Chainlink 2.0’s decentralized metalayer.
“Decentralized oracle networks are basically unique and distinct computational environments that usually have a singular purpose,” Nazarov said.
As the standard open-source platform for creating decentralized oracle networks (DONs), Chainlink 2.0 is working to expand to thousands and tens of thousands of DONs that form a secure connection between the on-chain and off-chain worlds. This connection is the decentralized metalayer.
Nazarov explained how this metalayer functions within the architecture of hybrid smart contracts, comprised of three important types of activity:
“You have on-chain activity, which is the contract code itself. Then you have off-chain activity, and the off-chain activity is the world’s data, market events, weather events, computing systems, back-end systems, and banks, whatever – anything that’s happening outside of a blockchain. Then you also have what we call the decentralized metalayer, which sits between the on-chain activity and the off-chain activity.”
DONs composing the decentralized metalayer provide hybrid smart contracts with a growing number of decentralized data feeds and services, such as random number generation through Chainlink VRF, automation via Chainlink Keepers and even more advanced forms of off-chain computation, such as Fair Sequencing Services (FSS), that are currently being developed.
This means that hybrid smart contract developers no longer have to choose between highly reliable, trust-minimized computation about on-chain events and highly centralized, untrustworthy computation about off-chain events (everything happening outside of a blockchain).
“You now have a middle road where you can do trust-minimized computation of the kinds that weren’t possible on a blockchain and of the kinds that couldn’t be made trustworthy by a central server,” Nazarov said.
In other words, the metalayer is an abstraction layer that allows developers to define what a hybrid smart contract does in relation to any type of data or computation they either cannot perform or do not want to perform (for cost, privacy or scalability reasons) on-chain.
Just as different centralized services can be combined to build applications like Uber, Chainlink’s decentralized metalayer is growing the number of decentralized services that can be combined to build Web 3.0.
“All of that orchestration has to happen somewhere. Where it’s already starting to happen is in these more advanced decentralized oracle networks that provide this decentralized metalayer,” Nazarov said.
Bennington further clarified the decentralized metalayer’s service-oriented architecture (SOA) model:
“The idea here is that you have a series of services that you can abstract from and that you can compose new services with in a way that is effectively encapsulated and can be plugged and played into other types of applications. It’s a very big-picture idea.”
While the metalayer is ever-evolving, it’s already changing the way the world works. “It’s ready now and it’s been ready for some time,” Nazarov said. He described a continuum, where the Chainlink network expands beyond powering the vast majority of DeFi protocols like Aave and Synthetix to enabling what Nazarov envisions as “the entire universe of everything that smart contracts want to do but are unable to do themselves on a blockchain.”
Sign up for a free account to watch Ash Bennington’s full interview with Sergey Nazarov on the July 19th episode of Real Vision.