What is Chainlink (LINK)? Crypto Project Overview

Thanks to Chainlink, projects that previously could only exchange data within their blockchains are now able to extract data from almost any source in the outside world.

Oracle is software that acts as an intermediary. It translates data from external sources into the language of smart contracts and vice versa. The process looks like this:

1. The smart contracts put out a request for information;

2. The Chainlink node uses the Chainlink Core software to translate this request into a language that real-world services can understand;

3. The translated version is sent to an external API, which collects data from the required source;

4. Chainlink Core translates the received data into smart contract language and sends it back to the blockchain.

Chainlink can integrate information from various network services into the blockchain. This can be data on financial instruments, weather forecasts, traffic schedules, or football match results. Because of this, DeFi smart contracts get the opportunity to expand the list of services offered.

You can read more about how oracles work in our article.

A lot of blockchain projects use Chainlink oracles, for example, Aave, bZx, and Synthetix. This integration helps them receive information about the prevailing rates in the market, as well as other data. According to the Chainlink website, their oracles are used by 1,500 companies around the world, including SWIFT, AWS, and Google Cloud.

The LINK token is a native coin of the ChainLink network of the ERC677 standard, which has the functionality of the ERC20 standard. The token is mainly used to pay rewards to node operators.

LINK is also necessary for the consistent performance of a reputation system. The more system tokens are blocked on the wallet of the node operator, the larger contracts he receives. However, if the information provided by his node turns out to be inaccurate, some of the tokens from its balance will be automatically debited. 

You can buy LINK on most CEXs, including KuCoin, OKX, and Huobi. 

LINK has set its all-time high in the spring of 2021 near $52. Since then the price of the token has been gradually declining, and at the time of writing, it is trading just above $6.