Frequently asked questions

What is Chainlink?

Chainlink is a blockchain abstraction layer that enables universally connected smart contracts. Through a decentralized oracle network, Chainlink allows blockchains to securely interact with external data feeds, events, and payment methods, providing the critical off-chain information needed by complex smart contracts to become the dominant form of digital agreement.

What is a blockchain oracle?

A blockchain oracle is any system that services a smart contract by providing it with data from an off-chain source or connecting it with an off-chain system. Oracles enable connectivity between blockchains and real-world data by interfacing with external APIs and data feeds, allowing them to pull data for or push data from a smart contract.

Why do blockchains need oracles?

Oracles allow smart contracts to interact with real-world data from off-chain sources. Without oracles, smart contracts can only access data generated on the blockchain, severely limiting their potential applications. Most of the valuable real-world use cases for smart contracts require off-chain data to trigger proper execution and often an integration with existing payment rails to settle a contract. For example, a smart contract may require market data from a trusted source like the NYSE to trigger a transaction. It may also require the ability to pay out escrowed fiat currency through legacy financial infrastructure, such as a bank checking account.

What is "real-world data"?

Real-world data, also known as off-chain data or external data, refers to the current global data infrastructure that exists outside of the blockchain that must be brought on-chain via oracles to be used by smart contract applications. Like a computer without the Internet, blockchain-based smart contracts have inherent value on their own, such as creating and swapping tokens. However, they become exponentially more powerful when externally connected to the vast and accelerating data and API economy taking root outside the blockchain ecosystem.

What is the oracle problem?

The oracle problem, also known as the “smart contract connectivity problem”, refers to a blockchain’s inability to natively pull data from or push data to any external off-chain system due to the strong security properties created by a blockchain’s consensus mechanism. 

Blockchain nodes are designed to perform standardized and uniform operations to generate consensus on a set of transactions (solving the double-spend problem). However, they are not suited to answer subjective questions about probabilistic real-world data, as blockchain nodes do not always have access to the same information, making generating consensus on even the most basic data requests challenging and source quality enforcement impossible. It is for this reason blockchains focus on generating definitive truth about the validity of transactions, but limit connections to any off-chain systems to ensure the network always remains live and produces deterministic results for incoming transactions. 

In order to create a bridge between the blockchain (on-chain) and the outside world (off-chain), there requires an additional and separate piece of infrastructure known as an “oracle”. However, the use of a centralized oracle can result in manipulated data inputs and outputs, meaning the oracle mechanism itself needs to be highly decentralized to ensure the security of a smart contract’s execution is maintained end-to-end.

What is the Chainlink Network?

The Chainlink Network refers to all of the decentralized oracle networks actively operating using the Chainlink protocol, including individual oracles, data providers running their own node, and node operators. By enabling smart contracts to quickly and securely connect to off-chain data sources using decentralized oracle networks, the Chainlink Network helps developers build more robust and diverse blockchain applications using real-world inputs and outputs. Additionally, as middleware between low-level blockchain protocols and external, off-chain data sources, the Chainlink Network serves as an abstraction layer for data providers to easily sell their existing APIs to any blockchain network.

What is a decentralized oracle network?

A decentralized oracle network consists of multiple blockchain oracles run by independent node operators that are chosen to retrieve and validate data from several different off-chain sources. Each of the oracles’ responses within a decentralized oracle network are aggregated together to form a single trusted data point, which can be used to trigger smart contracts on any blockchain and really any system that needs highly reliable data that’s provably accurate. The data delivered on-chain can be hosted in a Reference Contract (pull model), and/or delivered directly to consuming smart contracts (push model). 

Chainlink’s Oracle Network is made up of multiple decentralized oracle networks running simultaneously and independently of one another. For example, if a smart contract requires data about the price of ETH, instead of relying on one individual blockchain oracle to pull price data from one API source, the smart contract can use a decentralized oracle network to have tens to hundreds of individual oracle nodes pull data from several API sources and then aggregate the result. See here for a live visualization of this data on-chain.

Through decentralized computation, Chainlink-powered decentralized oracle networks provide users superior security and reliability guarantees on the inputs and outputs of their smart contract, ensuring that both on-chain and off-chain components of a decentralized application are tamper-proof end-to-end.

What is a node operator?

Node operators are the entities that maintain and run the blockchain oracles that make up each Chainlink Oracle Network providing smart contracts on various blockchains access to external data and resources. These operators consist of professional validators for various blockchain networks, teams of highly experienced DevOps engineers, and organizations that focus specifically on building infrastructure for the Chainlink ecosystem. Additionally, external data vendors and API providers can monetize their data sets by running a Chainlink Node and providing signed data directly to smart contracts. Node Operators are able to configure their blockchain oracle node to connect to any off-chain data source and on-chain blockchain environment, providing a high degree of flexibility. 

Node operators within the Chainlink Network strictly adhere to the best security practices and use external monitoring systems to ensure a secure and reliable operation is maintained around the clock. Third-party marketplaces like market.link and reputation services like reputation.link provide users insight into the current and historical performance of each individual node operator. Additionally, anybody can become a Chainlink node operator, as no permission is required, and immediately begin providing smart contracts access to off-chain data. If you are interested in running a node, please navigate to our documentation here.

Why choose Chainlink to aggregate data for a smart contract rather than building one’s own oracle?

Chainlink provides users with a simple to integrate and pre-built decentralized oracle solution that can be utilized today by any smart contract on any blockchain. A Chainlink integration allows developers to focus on their application’s core business logic without needing to allocate precious resources to rebuilding infrastructure. Rolling your own oracle is extremely difficult and probabilistic as the oracle problem is complicated, technical, nuanced, and requires constant monitoring, upkeep, funding, and resources to maintain properly.

The ability to easily integrate a project with Chainlink’s decentralized oracle network has enabled numerous teams to avoid the hassle of building their own oracle, allowing them to instead focus on innovating and building use cases. Additionally, as Chainlink users collectively fund oracle networks as a public good, the costs of using Chainlink are far lower than attempting to build and manage your own solution. For example, a growing list of DeFi applications now use and collectively fund Chainlink price feeds. If you are interested in integrating with Chainlink, please reach out.

Who participates in the Chainlink network?

The Chainlink ecosystem includes hundreds of dApps, blockchains, node operators, and data providers, as well as an expansive research and open-source development community. The Chainlink Network powers the leading DeFi applications including Aave, Synthetix, and yEarn, securing billions of dollars in user funds. As Chainlink is a permissionless framework for building oracles, anybody can join the network at any time and immediately start contributing to the growing ecosystem. See the Chainlink price feeds page for a more in-depth list of users, sponsors, and node operators.

What makes the Chainlink oracle network more reliable than other oracle networks?

The Chainlink Network is composed of the highest-quality, Sybil-resistant oracle nodes that are operated by leading DevOps and security teams, such Deutsche Telekom’s T-Systems, who have decades of experience running mission-critical infrastructure. The security-reviewed and tamper-resistant nodes that comprise Chainlink oracle networks are highly transparent: their performance and reputation metadata is made publicly available to users and can be found on-chain or on third party sites such as reputation.link and market.link.

Chainlink also employs a defense in depth approach where multiple security solutions are used in combination to increase oracle network robustness and reliability. This includes privacy-preserving cryptography like DECO, trusted hardware such as Town Crier, cryptoeconomic security through implicit/explicit staking, and much more.

How decentralized is the Chainlink Network?

The Chainlink Network consists of hundreds of professionally-operated and community-run nodes, allowing for the creation of numerous Sybil-resistant and tamper-proof oracle networks that can scale up in decentralization as the value being secured rises. Chainlink nodes are operated by professional DevOps and security teams with decades of experience operating mission-critical infrastructure and are already securing billions of dollars of value across multiple blockchain networks. The performance and reputation data about each Chainlink node can be found on-chain or on third party sites such as reputation.link and market.link.

How can I participate in building Chainlink?

There are numerous projects working on the development of the Chainlink ecosystem, including Chainlink Labs. You can find a full list of open roles on the Chainlink Labs careers page.

How can I stay up to date with Chainlink news and updates?

Stay up-to-date with all official Chainlink announcements in real-time through the Chainlink Twitter.

The Chainlink blog provides detailed resources for those looking for more information about announcements and written educational pieces. 

For events and meetups in your local area, visit https://events.chain.link

If you are a developer, please join our highly active community on Discord.

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