Is LINK a mainstream currency? Comprehensive introduction to digital currency LINK

Chainlink has become one of the most used projects in the cryptocurrency space. It is a decentralized oracle service that provides external data to smart contracts on Ethereum. In other words, it connects blockchain to the real world. Smart contracts automate agreements on the blockchain. They evaluate information and if certain conditions are met, they execute it. However, this creates a problem. Blockchain doesn't really have a good way to access external data. The difficulty in connecting off-chain data to on-chain data is one of the great challenges facing smart contracts. So is LINK a mainstream currency? Let me introduce the digital currency LINK to you.

Is LINK a mainstream currency?

LINK currency’s current market ranking is 21st, and it is a mainstream currency. Chainlink is a blockchain-based decentralized oracle network that allows smart contracts to connect to external data sources. These can include APIs, internal systems, or other types of external data sources. LINK is an ERC-20 token used to pay for this oracle service on the network.

So what makes Chainlink decentralized? Well, first of all, we need to understand what a centralized oracle is. It’s not hard to guess – it is the single provider of information external to smart contracts. This is just one source. This can cause big problems. What if that oracle provides wrong or incorrect data? All systems that depend on it will fail. This is often referred to as the “oracle problem” – and it’s what Chainlink is trying to solve.

Since decentralized finance (DeFi) has become increasingly popular, there has been an increasing interest in high-quality oracle services. After all, most of these projects use smart contracts in some way, and they also require external data to function properly.

With the help of centralized oracle services, DeFi platforms may be vulnerable to various attacks, including flash loan attacks by manipulating oracles. Events like this have happened many times, and they will likely continue to happen if centralized oracles remain common.

How does Chainlink work?

Chainlink uses a network of nodes to try to make the data provided to smart contracts as trustworthy and reliable as possible. Suppose a smart contract needs real-world data, and it makes a request. The Chainlink protocol registers this event and forwards it to Chainlink nodes to "bid" the request.

The power of this process is how Chainlink verifies data from multiple sources. Thanks to an internal reputation system, Chainlink can determine which sources are trustworthy with relatively high accuracy. This can greatly improve the accuracy of results and protect smart contracts from various attacks.

So, how is this connected to LINK? Then, the smart contract requesting the data pays the Chainlink node operator in LINK in exchange for their services. The price is set by the node operator based on market conditions for that data.

Node operators also stake the network to ensure long-term commitment to the project. Similar to Bitcoin’s cryptoeconomic model, Chainlink node operators are incentivized to act in a trustworthy manner rather than act maliciously.

The above content is the editor’s answer to the question of whether LINK is a mainstream currency, as well as a comprehensive introduction to the digital currency LINK. Chainlink is a decentralized oracle service that is said to have no single point of failure. Nonetheless, in September 2020, Chainlink nodes suffered a “spam attack” in which attackers may have stolen as much as 700 ETH from the node operator’s wallet. The attack was quickly resolved, but it serves as a reminder that not all systems are completely immune to malicious activity. LINK’s maximum supply is 1 billion tokens, 35% of which were sold during the 2017 ICO. About 300 million are in the hands of the company that created the project.

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