Crypto analyst Lark Davis, Chainlink and shared a series of tweets outlining the fundamentals behind its native token LINK. The analyst is of the opinion that Chainlink will amaze everyone in the coming years.
To understand Chainlink, it is necessary to first understand the problem it solves. Blockchains like Ethereum enable smart contracts, which are self-executing agreements between two or more parties. However, external data is often needed for smart contracts to execute properly. As Davis explains:
However, blockchains are self-contained networks that are siled from the rest of the world and other blockchains. Therefore, for an SC-enabled blockchain to work, it needs a communication bridge that connects it to real-world data or other blockchains.
How Does Chainlink Work?
Chainlink serves as a decentralized network of “oracles,” which are programs that transfer information between external data sources and smart contracts. For example, a decentralized exchange (DEX) may use a smart contract to allow trading in tokenized gold. Chainlink transmits the real-time gold price to this smart contract so that the DEX can accurately calculate users’ profits and losses.
altcoinprovides reliable data to blockchain applications by pulling data from multiple sources and enabling oracles to cross-check each other’s work. According to the developers, Chainlink has enabled the payment of over $9.3 trillion in smart contracts to date.
Role of LINK Token
Koinfinans.com As we reported, one of Chainlink’s greatest strengths, according to Davis, is that LINK is essential to the functionality of the network.
“This is one of my favorite projects because the oracle network and token are vital to tons of DeFi protocols and other dApps in the crypto ecosystem,” Davis concludes. As smart contracts become more prevalent on blockchains, Chainlink’s bridge to external data will only increase its utility going forward.