All news is rigorously fact-checked and reviewed by leading blockchain experts and seasoned industry insiders.
- With Web3 developments being on the fast track, a major challenge is offering the right infrastructure to cater to the requirements of high-end applications and use cases.
- Chainlink’s suite of products offers solutions across three key areas of data, computation, and interoperability.
Although the Web3 industry is seeing strong demand across different industry verticals and sectors, it still needs a strong infrastructure to support billions of end users worldwide. While several blockchain platforms have been working on it, Chainlink (LINK) has been spearheading this initiative by offering industry-standard infrastructure offering Web3 developers exactly what they need to innovate.
Chainlink says that currently there are three inherent disconnects around blockchain technology which include data, computation, and interoperability. Chainlink solves this connectivity issue by giving developers seamless access to external data, off-chain computations, and cross-chain interoperability. Let’s take a look into how Chainlink addresses each of the three verticals.
For #Web3 to fully materialize, it needs infrastructure that can support billions of end users globally.#Chainlink provides industry-standard infrastructure across 3 key categories to give Web3 developers what they need to innovate:
-Data
-Compute
-Cross-chain pic.twitter.com/ndSWgor9TL— Sergey Nazarov (@SergeyNazarov) March 21, 2023
1. Data
As we know, Chainlink Price Feeds have become the industry standard in order to fetch secure and reliable asset prices. The launch of the Chainlink Price Feeds across 16 blockchains has been a major boost to the DeFi ecosystem enabling more than $7 trillion in transaction value over the last year.
But Chainlink believes that DeFi is just the tip of the iceberg and the potential of getting data on-chain is limitless. As a result, they are expanding their data platform footprint into multiple areas. This includes adding more data feeds over more blockchain platforms via a new mechanism that will enable the on-chain derivatives market.
In Chainlink’s vision of introducing new industry-rate data products, each data type will act as a tool in the DeFi developer toolbox. This will help Defi to unlock new markets such as interest rate swaps markets, improved risk management, and much more.
With its data products, Chainlink seeks to address the issues of latency and frontrunning risks currently faced by DeFi. For this, Chainlink is working on a low-latency oracle design that will be more gas-efficient and support low-latency update speeds. This will expand the potential dApp use cases for derivative protocols currently constrained by frontrunning, latency, and on-chain costs.
Similarly, Chainlink Functions will allow developers to connect their decentralized applications (dApps) and smart contracts to any Web2 API. Using Chainlink’s secure and reliable network, developers can run custom computations on API data in minutes.
Chainlink Functions offers integration to popular platforms like Amazon Web Services (AWS), Meta, the Associated Press (AP), and more.
Chainlink Proof-of-Reserves will look after the verification of on-chain and off-chain reserves in an autonomous, reliable, and timely manner. This could include verifying the reserves backing bridged assets or bank reserves of a tokenized stablecoin. Chainlink PoR provides users with greater transparency on tokenized assets with the use of cryptography and decentralized consensus.
Privacy is a key issue with working on blockchain and privacy-preserving oracle protocol Chainlink DECO will offer individuals and businesses “to prove the provenance of data coming from a particular data source to an oracle”. Thus, Chainlink will empower users on sharing their data without compromising on their privacy.
2. Compute
Chainlink Automation provides a highly reliable and performant smart contract automation solution for developers willing to outsource DevOps-related tasks onto a decentralized oracle network. This will allow developers to focus on perfecting their products and scaling quickly in a cost-effective manner. Chainlink Automation helps to seamlessly combine several Chainlink services. It’s already used by a wide range of projects such as Synthetix, Aave, PancakeSwap, and Benqi.
Another Chainlink product addressing the computational challenges includes Chainlink Verifiable Random Function (VRF). This is the industry-standard source for offering fair and tamper-proof on-chain randomness for different blockchain-based applications.
Chainlink VRF is already live on five blockchains such as Ethereum, Polygon, Binance Smart Chain, Avalanche, and Fantom. They believe that Chainlink VRF will find major use-case applications in the gaming sector, and iGaming specifically.
Chianlink’s Fair Sequencing Services (FSS) is a transaction ordering solution that mitigates harmful MEVs and makes decentralized systems fundamentally fairer. As Chainlink explains: “FSS uses a decentralized oracle network (DON) to fairly order transactions based on one or a combination of two different techniques”.
3. Cross-Chain Compatability
One of the biggest challenges that blockchain platforms are cross-chain compatibility. Also, the cross-chain protocols are inherently complex due to several variable factors at play.
Chainlink’s Cross-Chainlink Interoperability Protocol (CCIP) is an open-source standard for cross-chain communication that helps in establishing a universal connection between a public and a private blockchain. Applications and user interfaces built atop the CCIP can send arbitrary data transfer tokens, as well as pass instructions along with tokens across blockchains.
Chainlink’s decentralized oracle networks help in powering up the consensus and transport layer. This oracle network service from Chainlink has helped in securing tens of billions of dollars in value.
Chainlink is building a developer community that will share a common goal of building the future of Web3. “We are continually amazed by the ingenuity, creativity, and perseverance of developers in the Chainlink ecosystem,” said Chainlink.
