With the world of finance and Fintech, the field seems to be evolving. New blockchain products are proof of that and we will walk you through all of it. Specifically, we will look at a new version of it known as Chainlink. What is it and how can you benefit from it? Let’s check out the basics and what role the chainlink plays in a decentralized economy.
The Role of Chainlink in a Decentralized Economy
In the world of blockchain technology, there exists additional tech that covers the gap between on-chain and off-chain worlds. These are what are known as Oracles and Chainlink is such a piece of tech.
To understand how Chainlink works, you must delve into on-chain and off-chain worlds. The on-chain world is a myriad of transactions and updated ledgers found on any chain. Any event that is considered important in the actual world is what is known as the off-chain world.
Despite their great importance, blockchain systems have one fatal flaw. They can keep up with and closely follow all activities that occur on the blockchain system. However, anything outside of that is left in the dark.
This flaw limits any smart contracts the blockchain deploys because they cannot use reliable data from outside. This undermines the core idea of decentralization in the cryptocurrency world.
How Do Oracles Like Chainlink Work?
In short, oracles work by aggregating actual data from the real world from various sources. This allows error correction and redundancies. This is crucial for smart contracts found on-chain to take information from the real world. Chainlink is one such oracle that operates by sitting right between blockchains and the real world.
Any decentralized tech thrives with this technology. Even decentralized insurance depends on it especially for weather events that you cannot predict. Any data sources that are perfect to be used are plugged into the blockchain. This data is eventually used to inform smart contracts.
The Oracle Problem
The oracle problem can be broken into two parts. The first one has been discussed above and analyzes the blockchain’s fatal flaw. This fatal flaw makes blockchains as secure as they tend to be.
The second aspect of this problem focuses on blockchains referring to external data sources that belong to APIs, for example. APIs are centralized entities, which undermines the point of your typical smart contract. Because third parties can be manipulated, they compromise the integrity of smart contracts and disrupt them.
Chainlinks are the oracles that are decentralized data sources, preventing any node from failing. Nodes are required to sign data cryptographically. This is done to make sure that feeds cannot be tampered with. It also makes sure that user communities can monitor the historical veracity of a node.
Rewards are brought in and similarly, there are penalties for nodes. This encourages good behavior and accurate depictions of data.
Why Possess Your Own Chainlink Node?
Among our many services, we offer Chainlink technology. We have great experience in this field and help especially with the stock market. Finage also deals with other aspects such as the following:
- Equities
- Data retrieval
- Cleansing
- Futures and options and
- Normalization and aggregation challenges
These are all built to support Chainlink systems that are able to handle various data feeds in the volatile crypto economy.
Finage also operates in a manner that is asset agnostic. This means that our tech can be stress-tested in different markets and conditions. Each market is different, but our technology is made to suit all of them and maintain their quality.
More Than Just Price Feeds
Our services go further than providing a means to collect data. Our other specialty is the creation of custom feeds and other related products. DeFi has started a trend that has led to a Cambrian explosion of innovative crypto derivatives. Said derivatives can be used to build new construction methodologies and a new set of custom analytics.
Although reliable data is the cornerstone of the crypto world, synthetic index and asset construction also fill it. In many ways, they are where the real work begins. Through years of experiments, these ideas coil add value to form methodological views.
We also deal in cases that involve tracking crypto stablecoins across blockchains. This opens up opportunities to create thematic instruments. These will be used to allow exposure to the following:
- DAOs
- Lending platforms
- Derivative exchanges
The DeFi sector has several emerging protocols and assets that can be leveraged. This demands more than price data. As we grow, Finage believes that a SaaS-style custom data provision will emerge and become the norm.
The constantly evolving state of the crypto sector is expected. This means that chances are that a cross-chain variant is in the works.
Final Thoughts
The crypto world is a meandering circle that needs close monitoring. While our base is in basic finance, we have branched out over the years to other things. You may say that our evolution better integrates us with the world as it is. From bitcoin to the blockchain craze and now to chainlink and oracles.
You can get your Real-Time and Historical Cryptocurrency Data with Finage free Crypto Data API key.
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