Chainlink Cryptocurrency: The ULTIMATE Guide to Chainlink! // $LINK

by birtanpublished on August 21, 2020

Ladies and gentlemen in this video I'll be breaking down what you need to know about chain link what problem does it solve how does it work how strong is their solution and all that good stuff today's chain link deep dive is part of a series that I like to call Tech Talk

Tuesday where I break down cryptocurrency projects in an in-depth but also easy-to-understand way so make sure you subscribe and you have notifications turned on down below so you don't miss any of these deep dive

Videos thanks in advance and without further ado let's hash it out so with chain link what's the problem at hand here well in the world of blockchain one of the most touted inventions is the smart contract which

Is quite literally a piece of software written code that lives and executes on the blockchain in a decentralized manner smart contracts have the ability to revolutionize processes like escrows asset transfers and etc because of the

Pure deterministic logical method by which they issue funds and perform actions determinism means that given a certain criteria or input the result will be predictable and constant same it put in same output out in the context of

An escrow for example the smart contract will distribute the escrowed funds when and only when the conditions are met and will pay in full as the agreement states no single party within the agreement facilitated by a smart contract can

Simply choose to break the terms the code will govern what is allowed and what is not however there's a problem here because 99% of the time not every piece of information needed for the contract to make these critical

Decisions or measure the criteria for certain actions is on chain and accessible at the time it needs it for this we need external data for example if you want to set up an application that will deduct 5%

Penalties on a payout for produce shippers for every hour that the produce temperatures during transit rise above the target holding temperatures you need to feed the temperature sensor data into the contract somehow for the contract to

Do its job this external data feed to contracts is called an Oracle now a lot of hype is given to smart contracts but the reality is is that they aren't smart they only do what the developer tells them to do and the conditional logic can

Only execute with quality results when quality data is input through an Oracle in our example it's not as simple as making the shippers submit the data because as a single data Oracle there's incentive for them as the shipper to

Fake the data to avoid the penalties you then lose the core benefits of a smart contract the decentralization and the disintermediation by making the decisions and the criteria by which the data is processed unilateral and

Centralized the value was lost this is where chain link playing and this is where they're solving the problem at its core chain link is designed to provide a trusted decentralized oracle infrastructure and

Framework for smart contracts on multiple block chains the goal is to provide reliable tamper proof inputs and outputs on multiple blockchain networks that can be used to build complex and valuable smart contract ecosystems chain

Link is led by CEO Sergey nazarov an experienced entrepreneur and Steve Ellis a software engineer who was formerly at pivotal labs in my opinion the team looks pretty darn solid and as someone who developed some our contracts for a

Living I think the concept behind chain link has a real value and honestly I would use it myself I've actually started developing with it personally fairly recently I will admit I was a bit skeptical about

Chain link when it came into the scene because of the sheer volume of Oracle projects springing up and quite frankly there were a lot of bot comments on Instagram and on YouTube but as a dug deeper during research for this video my

Tune has really changed I think there's something really powerful here and quite frankly I haven't experienced this type of excitement about a project or product that's been delivered in quite a while so that's really positive news of course

The idea is one thing the use case is one thing but the execution is the important part so let's talk about chain links execution and how this all works now that we know what it's all about so how does chain link work I'd like to

Preface this by saying that chain link is currently live on the etherion main net and operating today among other block chains so that's good news there are of course more and more and more chains integrations in the pipeline to

Support chain link as well so this is not limited to aetherium on its own as I'm explaining this stuff however I'll likely keep it in the context of aetherium that doesn't mean it's aetherium exclusive chain link is

Working to link up pun intended with other block chains like icon and cava the project on the cosmos blockchain with that said let's break it down to create an environment where data inputs to smart contracts on the etherium block

Team can be facilitated in a decentralized manner there's a need for both on chain and off chain components a chain link network is really made up of several chain link nodes who can carry out data oriented jobs coordinated by

The on chain Oracle contract or contracts plural these Oracle contracts use linked tokens as an incentive to chain link node operators to execute the specified jobs that smart contract developers contracts

Need to be done in terms of data feeds these link tokens are also the financial deterrent for chain link node operators to falsify data accept jobs they can't deliver and so on and so forth more on that later now question of the day

Really quickly do you hold linked tokens let me know up in the pole above or down in the comments below alright let's unpack B on chain components we just talked about first the core functionality of the chain link

Ecosystem is encapsulated on chain within the oracle smart contract this chain link oracle contract serves as the core interface for DAP developers to interact with the off chain chain link node operators think of the oracle

Contract as the bridge that connects the on chain contracts and components developed by adapt developers to the data providing chain link network nodes that reside off chain this brings me naturally to the second big on chain

Component which are the custom contracts created by DAP developers themselves that interact with the chain link Oracle's I like to call these the consumer contracts because they consume Oracle data feeds from the chain link

Network in essence these consumer contracts are developed to integrate the core library of chain link functionality and communicate with an Oracle contract to send job requests to the off chain chain link nodes the data job request

Sent by the consumer contracts are the means by which off chain chain link nodes can pick up the data jobs these requests in general usually contain the job ID the link token payment amount the data job execution parameters like what

Data they want and the contract address or addresses plural that the data should be sent to upon job completion the job ID identifies specifically the off chain chain link node that needs to handle the request and subsequently defines the

Specifics of the data job that's being requested now another thing to note here is that there can be more than one Oracle contract on the network quite frankly there is this allows both consumer contracts to choose which

Oracle contract to send job requests to and it also allows off chain-linked modes to register with one or many on chain Oracle contracts to be able to decide where they're going to process and what jobs are gonna pick if

This is confusing now don't worry it's gonna make more sense when we get to the off chain components but first there's one final on chain piece that needs to be mentioned here the link token contract the link token that I mentioned

Before is used in the network both to incentivize Oracle's to fulfill job requests with rewards but also to deter Oracle's or these off chain Oracle notes from performing poorly or acting maliciously in the network so this link

Token contract minted 1 billion that's billion with it be linked er C 20 tokens which are also compatible with the ERC 677 token standard which is cleverly designed to allow transactions of tokens to also include a data payload that can

Be used to invoke smart contract functions passed data and all sorts of other cool stuff this makes the ecosystem a lot more efficient and friendly because what used to take two transactions now can be done in one this

Way contracts implementing chain link functionality can transfer link tokens and perform an action without sending these two transactions it can be done in one I'm seeing more and more projects implementing this way and I'm really

Stoked about it it's awesome so to review the on chain components here's what you need to take away the oracle contracts are responsible for the following controlling which chain link nodes can fulfill data job requests much

Like role management a bridge communications between the on chain consumer contracts and the off chain chain link network nodes and they communicate data job results from the Oracles back to the consumer contracts

They also control punitive link token lock ups for poorly performing or malicious chain link network nodes that are off chain among other things now the key function in the oracle contracts is to really transmit on chain

Job requests from the consumer contracts to the off chain chain link network nodes using aetherium event calls now the consumer contracts are simply custom contracts created by DAP developers that send Oracle data job requests to the off

Chain chain link nodes through the Oracle contract then they receive the requested data back for whatever use they need the link token contract handles the core transaction functionality of the link tokens on

That are used to pay for data jobs and determinist Network activity boom that is the on chain stuff we are making progress so now let's talk about the off chain part chain links off chain network consists of several community run

Oracle's that sit outside the blockchain network or networks plural and these handle the data processing jobs and the submission of the requested data back to the consumer contracts on chain at a high level a chain link Oracle connects

To the external data sources that might be it processed that data according to the job spec sent by a consumer contract then they provide that data back to the requester on chain there can be many many chain link nodes that connect to

The blockchain and each of them operate independently to process job requests so when I say the off chain Network I'm referring to the totality of these chain link nodes that are off chain that are run by a variety of operators on a

Variety of different data sources these chain link Oracle nodes are each composed of several distinct pieces that are necessary to do their job that said an operator of a chain link Oracle will have infrastructure that's generally as

Follows number one a chain link node itself this node software really handles the data requests from the consumer contracts on the blockchain scheduling data jobs executing each jobs individual tasks then passing a signed blockchain

Transaction back to the requesting consumer contract with the results to a blockchain node this blockchain node is part of the Oracles infrastructure that allows it to watch the blockchain for new requests from consumer contracts

These are watching events more so and then to broadcast another signed transaction back to the blockchain to fulfill the data requests and then three external adapters these are custom pieces of logic that performs certain

Operations on a data set these adapters are extra tools that can be integrated into an Oracle to help massage and manipulate the data before it's returned to the requesting consumer contract adapters are a common architectural tool

Used in modern enterprise tech to manipulate data and translate it between multiple sources and stores and then finally data sources these are the ever-important data sources that the oracle retrieves data

From to provide to the requesting consumer contracts these can be public api's or a privately held data store for example the public IP API can provide geolocation data about IP addresses that can be used as

An oracle to prevent the issue of centralized data feeds however many Oracle's are built to aggregate data from multiple sources to get a more trustworthy data set what you need to take away from this is that the off

Chain chain link network is composed of the multitude of independently operated chain link Oracle nodes that can connect to the chain watch for their job IDs handle request for data and earn link tokens for their work boom well done you

Now have a variety of Oracle options to choose from and each of these Oracle's can pull data from multiple aggregated sources to make sure the data is trustworthy more on trustworthiness and decentralization of Oracle's later on so

Stay tuned now to wrap this all up in one nice cohesive package let's walk through an example end to end let's say that I operate a chain link Oracle node to provide current weather data to consumer contracts and I've deployed an

Oracle contract to the blockchain that identifies different job IDs for requests or job specs my node will handle then let's say that you've created a consumer contract for your DAP from which you need to request weather

Data within your consumer contract you will specify in the code which Oracle contract to consume data from in this case let's say it's mine and then you'll also notify the address of the link token contract this allows your contract

To connect to the correct Oracle in this case mine then you would write functions that invoke each of the different data jobs by their job IDs and define the necessary handling functions or handler functions rather to process the return

Data now let's say you want to request the current weather by zip code you would initiate a transaction from your consumer contract to my Oracle contract containing the job request for the data identified by its job ID and containing

Any information or specifications needed for the data again the critical component in that transaction that you send is the job ID which tells the Oracle contract which particular data job you're requesting and then sets the

Job specifications accordingly when the Oracle contract receives your trends it broadcasts an event to the blockchain that contains a job ID and parameters for your request of course my note is watching for these events so then this

Event is picked up by the blockchain node that resides in my chain link Oracle node setup and that job is picked up from my node to handle in terms of the request the job ID provided in the request pertains to a job specification

That my chain link node will execute and within this specification itself it tells all the steps that need to be performed on the data by my chain link node each chain link node itself has a unique job ID for each job spec which

Makes sure there is a clarity in which jobs are handled by which Oracle's next my chain link node retrieves the requested weather data from the weather comm API for example performs any necessary operations on the data based

On that job spec and then returns the results via a signed transaction back to the Oracle contract on the blockchain this matches up the requestor ID for the job with the callback address or any other addresses added to the job request

Which in this case would be your address because you're the one who is receiving the data back finally your consumer contract will have a function that handles the returned data as required which will be triggered as a callback

From the Oracle contract this is a high-level lifecycle of a chain link Oracle request so if you've made it this far thank you very much we've got a lot more awesome stuff in store about chain links so stick with me now I do want to

Touch on the link token just a bit more as we discussed the tokens are used for two distinct purposes one to pay for data feeds from the chain link Oracle's and to establish deposits and penalties for bad actor Oracle's the first purpose

Is self-explanatory consumer contracts that request data from Oracle's use link to pay the off chain Oracle's for data feeds however the other purpose for link tokens that we have not yet addressed in detail is that consumer contracts can

Request deposits of link to be made almost like a security deposit from a chain link Oracle as collateral until their job is fulfilled this is to fight against potentially nefarious data feeds this structural design is there to

Establish a disincentive for chain link Oracle's off chain to supply false or poor we managed data or to just not deliver at all because they can then lose the link deposit that they must provide to

Fulfill a consumer contracts requests this is clever my only concern here is that when chain link is used on other chains it will be reliant on the etherium network to manage issuance of link tokens based on

Its current implementation if I'm missing something here I invite the community to correct me but interoperability between chains can help solve this challenge ie cosmos polka dot etc now in this video so far I've

Described what is very much so the current state of chain link that's live now with a few caveats however there are some big features that are coming to bring things even closer to the vision outlined in the white paper that I want

To address as well currently we addressed already that consumer contracts must directly issue a transaction to an oracle contract for each data request this means that to aggregate data from multiple Oracle's it

Will require multiple transactions to multiple Oracle contracts with different job IDs and then you must aggregate that data back when it comes in receipt the biggest upgrade that's coming to chain link is the ability to coordinate

Request for data using service level agreements this will all happen within a coordinator contract of sorts in essence the service will be deployed to handle requests for data from consumer contracts and then route them to a

Variety of different chain link nodes that have signed up these chain link nodes then be able to bid on these data jobs this would make the ecosystem far less reliant on each chain link Oracle node deploying their own Oracle contract

And shopping that and shipping that out to handle all of their own jobs this results in better experience for consumer contract developers allowing them to specify a job and then get matched with the basket best Oracle for

The job without having to lock into a single Oracle contract upfront so generally the process for automated matching and service level agreements would be as follows one a consumer contract will draft an SLA defining what

Data is needed how many Oracle's must contribute and how that data will be aggregated they'll even be a reputation measurement system built-in to prioritize more trusted Oracle's for your data requests then

From there the coordinator service will broadcast that SLA to the event logs where oracles can identify potential matches and bid for the right to fulfill that data request bidding chain-linked

Oracle's are then matched to the requests based on the parameters in the SLA and their bids in link will be locked in as collateral for the request fulfillment the selected chain-linked Oracle's fulfill the request for data

According to the job spec and the results are provided back to the or aggregation contract specified in the SLA this can be used to post process data for whatever purpose the consumer contract requires so think of it like

That adopter yet again so any Oracle then providing false data or failing to deliver on the SLA will lose their bid and forfeit any rewards in link that they would have received for successfully delivering on it this will

Also be something that feeds into negative feedback for the reputation score as well as an Oracle so the whole thing is set up as it truly decentralized processing mechanism for providing data on chain this process is

More efficient because it not only removes the need for self managed and fragmented to be quite honest oracle contracts for each chain link node it also creates an effective micro economy for Oracle services with bidding on SL

A's this also solves the centralized Oracle problem in a way because this system would further enable multi Oracle requests where one job is processed by five maybe even more Oracle's and then the results aggregated get passed back

To the consumer contract this doesn't mean that manual requests for Oracle's is no longer viable quite frankly I feel that a manual selection of Oracle's will still be the predominant way that consumers get data but having the option

To do automated matching and fulfillment when manual selection is not feasible is a killer feature now one minor concern or clarifying question that I have in this regard is a proportion of chain link functionality is native to the

Blockchain it resides on and that's just natural which in the current state is aetherium because the smart contracts are predominantly used on aetherium this is really good for performance however this also means that every blockchain

Chain link wants to integrate with they need to adapt their core contract functionalities to that particular chain scripting language like Zilla cos Silla language for example but that's not as complete or powerful as solidity is

Despite the flaws maintaining a code base for one on chain and off chain tool is plenty but then adding multiple chains and multiple languages and multiple scripting languages and multiple virtual machines

You get the idea gets really arduous the good news and sort of a semi answer to my question at least what I think is happening is that chain link is targeting interoperability chains like icon like cosmos to solve

This problem using icons cross block chain communications protocol for example chain link Oracles could serve data to a variety of blockchain networks without having to custom develop for each one this could put Oracle's in more

Hands on more chains with a relatively low level of effort opposed to custom builds for each chain great move this is the idea then please let me know all in all I'm really excited about what chain link is building and some of the

Notable partnerships and development teaming they've done are going to be paramount to their success I'm not gonna go through every single partnership because the list is way too long but there are significant significant names

On that list and I'm sure in the comments down below people will be commenting their favorite chain link connections their favorite chain link partnerships and hopefully you guys can read that list down below

So I'm a huge fan of chain link and their work and I have high hopes for the future development of their decentralization features and as always folks I hope you can stick around to check out one of these other videos here

I have awesome Tech Talk Tuesday videos for you to check out other protocols thank you so much for watching and until next time Cheers

Related Videos

Hello the Republicans and welcome to another video of my cryptocurrency news series where I'm looking at the news that happened last week now today's 28...
What's up crypto gang welcome back to another episode if you guys are doing here we do a giveaway at the beginning of every single episode and today's w...
What's going on guys crypto jeremy here back with xrp video hope you guys have a fantastic day thank you guys so much for tuning in to another video and the...
What's up guys kevin cage here just wanted to do a quick market update on this monday so as we can see ada ada is down 11 today we noticed that it is coming...
Hello the Koopalings and welcome to another video in my cryptocurrency event overview series the aim of the series is to find any upcoming cryptocurrency events...
Ladies and gentlemen people of the internet welcome back to yet another episode of crypto over coffee hope you're doing well today and if you're new her...
Hey guys welcome back so first of all I want to start as usual by thanking everybody who's been liking subscribing and sharing my content you're helping...
Hi i'm brad garland house the ceo here at ripple it's an honor and really a privilege for us to be one of the founding members of the international asso...
Hello the cubicles and welcome to another video maker of the currency event over the series the aim of the series is to find any upcoming the currency events an...
I have to apologize to everybody because I've been promoting a company who only has their best interests at heart top salesmen best interests at heart and n...
It is Monday and you know what that means another episode of Krypto segments what's going out everybody it's your boy Krypto Bobby I hope you were havin...
What's going on everybody Alex back was another cryptocurrency video but today we're going to be talking about how to control yourself how to emotionall...
Hey guys welcome back first off I want to thank everyone who's been liking subscribing and sharing my content you guys rule and I appreciate all the constan...
Live from the USA hoping you get paid every day this stuff boasts a Bitcoin the crease though of creeped up is avoid BK and if you don't like me you must no...
Okay come down here boom that would be picture-perfect beautiful guys look at this we actually have this candle come down right on this line right here right ab...
Wow you guys are going to want to check this out guys as you may know Bitcoin has decreased a few hundred dollars as of about midnight last night we have some i...
What's going on guys crypto jeremy here back with xrp video hope you guys had a fantastic day thank you guys so much for tuning in to another video today&#3...
Hello tokens and welcome to another video nice update now today's third of June and I'm looking at news that happened from 28th of May until today I alw...
hello it's Brad Lori or blockchain Brad and today we're speaking exclusively with icon many of you know it you've known it for years and they'r...
People what's going on this an update on Tron all right so the market right now market cap is 431 billion we've got a Bitcoin dominance roughly 34 perce...