DamoTalks#36: Conversation with Chainlink, The World’s Largest Dencentralised Oracle Network
Guest: Legel, Manager of ChainLink Community
Host: Jane — Event Operations of TokenDamo
Live Assistant: Lin Lin
Live time: January 5th, 2022 08:00 UTC
Welcome to DamoTalks#36, we are happy to welcome Chainlink, the world’s largest decentralized oracle network!
Thank you for joining us today for the Token Damo AMA and we appreciate your support. Let’s get started with our Q&A session!
Jane: Hi Legel, welcome to Token Damo and it’s a pleasure to have you in our community today.
Legel: Hello everyone, I’m the Community Manager in Chainlink and I’m happy to be here today to talk about Chainlink with the Damo community.
Jane: Before we get started, can you tell us a little bit about yourself and the Chainlink project?
Legel: I’m in charge of the Chainlink Community and would like to share with you about Chainlink, which is an oracle machine project, and I’ll tell you more about what we do and what we’ve done.
Jane: Thank you for your introduction and let’s get started!
Q1: What is the positioning of Chainlink now? For people who don’t know much about Chainlink might only know that you do oracle machines, but what exactly does your actual business include? Can you share with us?
Chainlink is a decentralized oracle network that establishes tamper-proof and highly available connections between smart contracts and high-quality data sources worldwide.
Smart contracts can use Chainlink to access data related to financial markets, cryptocurrency prices, weather, sports results, IoT sensor readings, and any other data that is verified in the real world to achieve a more robust, useful and blockchain-based application.
Chainlink is a high-value contract application for any blockchain network, providing authoritative facts in the real world, thereby safely connecting the world’s existing infrastructure to the emerging blockchain infrastructure that aims to redefine it superior. As infrastructure in the blockchain industry, our business includes:
- Data Feeds, meaning data provision including DeFi price feed, weather and climate data provision, financial data provision such as futures, and data provision such as presidential elections, luxury goods, charity, etc.
- In addition, we also offer ocr (the off-chain data calculation), VRF(verifiable random numbers), Keepers (which will be discussed in detail later), FSS(fair ranking service) and CCIP(Cross-chain interoperability agreements) that we will launch soon. I believe we are an all-round layout of the middleware market.
Q2: Chainlink provides a wide range of decentralized services for smart contracts through a decentralized independent oracle node operator network, including Price Feeds of financial market data that power the DeFi economy, verifiable randomness, and proof of reserves, Keeper Network, etc.
Could you please explain to us what is Chainlink’s Verifiable Random Number (VRF)?
Everyone knows that before true random numbers, programs generally used block hash values as random numbers, but they are easily manipulated by miners, and to a certain extent, they can even be manipulated by users who send transactions to the block.
Chainlink VRF is a more secure solution by comparison. The oracle has a pair of private key and public key (sk, pk), the private key is stored off-chain, and the public key pk is public. In order to generate random numbers, the prediction opportunity uses sk for the unpredictable seed x provided by the contract on the chain (note: the seed can be the block hash value or DApp specific parameters), calls the function F, and exports the result y = Fsk(x) , And generate a certificate. The VRF can be verified because pk can be used to verify the proof and y. Therefore, if an attacker cannot predict x or obtain sk, it is impossible to predict y and cannot be manipulated.
Chainlink VRF can be seen as an application that escrows private keys off-chain. More generally, DON can store keys securely and decentrally for applications and users, and combine this function with general-purpose computing. This will give birth to a series of applications, which will be explained in detail in our white paper, including decentralized identity authentication for reserve funds and users, as well as other digital asset management keys.
Q3: How is the VRF solution safe and efficient?
The main function of Chainlink VRF is to ensure the fairness, uniqueness and security of the blockchain’s random numbers. However, if the random number is manipulated during the generation process, the attacker may use the random number vulnerability to launch malicious attacks, such as minting the most rare NFT for himself, or transferring lottery prizes to his wallet address. This will have a serious impact on the value of the NFT, because users cannot verify whether the attributes and assignments of the NFT are really random. In response to the problem of random numbers, our development team developed a blockchain verifiable random number, which is our Chainlink VRF. Chainlink VRF uses a verifiable random function to solve this problem. The verifiable random function can access a secure source of random numbers for smart contracts and NFTs, and provide encryption proofs.
Before the random number is transmitted to the NFT contract, the encryption proof needs to be verified on the chain to ensure the reliability of the random number. Chainlink VRF has strong security guarantees, which can ensure that oracles, users or developers cannot manipulate the random number generation process, and generate rare attributes for NFTs and assign them in a fair and verifiable manner.
The biggest advantage of using Chainlink VRF tool is that the random number can be verified. Even if a node is compromised, the node cannot control or influence the final result because it cannot pass the encryption verification on the chain. The worst case is that the fallen node does not respond to the request, and this will be recorded by the blockchain immediately and will be kept on the chain forever. Users can refer to valid certificates and no longer use nodes that have failed to respond or cannot provide valid signature records.
Even if the node is manipulated, the final random number generated will not be affected. The compromised node can only choose not to respond to the request, and under the staking mechanism that Chainlink is about to go online, such behaviour will be fined, and the problematic node will be removed from the list of random number generators later. Therefore, low-quality or non-compliant nodes will suffer huge short-term and long-term economic losses.
In short, as long as the Chainlink VRF is correctly connected, it can never be controlled. The only thing that can happen is that the problematic node goes offline or does not respond, and then it is completely removed. This mechanism provides a great security guarantee for smart contract developers and users. Chainlink VRF has another advantage, that is, as the number of users continues to increase, the fees paid by users to node operators will increase accordingly, so nodes will be more motivated to provide as much security as possible.
Q4: The lack of a reliable oracle is the main obstacle to the development of smart contracts, and the smart contract system requires new oracle technology. How will Chainlink fill this gap?
Chainlink’s vision is to build a world based on facts. The data currently provided by Chainlink has always been based on the basic principle of truth> trust. Under this basic principle, with the development of the market and the advancement of technology, we are constantly iterating ourselves to adapt to the development of the market.
Taking our price feed as an example, from the launch of the mainnet in 2019 to now, with the outbreak of DeFi, we have also iterated several versions to adapt to the increasing demand so that we can safely protect more assets.
Our VRF — With the popularity of Gamefi and NFT, our v2 version will be launched soon. These are self-iterations that we are constantly adapting to this market.
Of course, like you said, smart contracts require new oracle technology. With the development of the entire industry, especially when DeFi broke out last year, many people think that on-chain fees are expensive, so Chainlink launched the OCR function, and when everyone is crazy trading DEX, Chainlink launched the FSS function, etc.
Most importantly, with the development of smart contracts and the increase in cross-chain demand, we at Chainlink are now testing the functions of CCIP and will be fully online in the near future. These are the self-renewal and self-iteration of our Chainlink based on the market. For us who are the leaders in the oracle field, what is important for us is not to compare ourselves with others, but to compare ourselves with yesterday. We make progress every day, and we believe that we will become the standard of this industry very soon.
Q5: I recently saw a related article about BSC providing Chainlink Keepers opportunities for smart contract developers. Can you tell us more about it?
Keepers are decentralized off-chain computing. Developers can use Chainlink Keepers to write code to execute off-chain tasks decentrally, usually by triggering the execution of smart contracts on the chain. Before the emergence of Keepers, developers often had to manually run this off-chain logic, which would lead to a centralized single point of failure (and a large amount of repeated development).
Keepers can provide developers with a simple and easy-to-use framework to decentralize these operations, shorten the development cycle, and improve network activity and other security features. Keepers can trigger various types of tasks, such as liquidating loans or executing financial transactions based on price and initiating airdrops or payments based on time.
In the DON framework, Keepers can be regarded as one of the initiators. The starter can be connected to an adapter, so it can be connected to the modular code base in the on-chain and off-chain systems, and safe and complex functions can be quickly developed. The launcher can start the operations in the executable program. The executable program can implement all the functions of DON, and can provide various decentralized services mentioned in the white paper for on-chain and off-chain applications.
Q6: Does Chainlink have any incentives for developers? In other words, how do developers benefit? How do you plan to build a developer ecosystem?
Instead of answering them separately, let me put this all together :
Chainlink attaches great importance to developers. We now send out weekly grants to outstanding developers or teams that develop around the Chainlink ecosystem. For example, ens has also received our Chainlink community grant before.
We will also launch a joint funding plan with other projects to reward Chainlink for ecosystem building around other projects, and the rewards are very generous. For example, we launched a joint incentive plan with Filecoin some time ago to encourage developers to combine Chainlink and Filecoin to build end-to-end decentralized applications.
In addition, we have also released a bug bounty program to encourage technical personnel around the world to participate in our code review and function use, and give generous rewards to developers who help ensure our network is more secure.
Another big incentive is our hackathon. We held two hackathons this year, one in spring and one in autumn. At the just-concluded autumn hackathon, thousands of projects were registered and submitted. Not only we have many projects participated, but we have also been sponsored by many partners. The top projects in the industry have sponsored our hackathon. These award-winning projects will not only be invited by us to participate in our various activities and workshops, but will also be recommended and incubated by us first. I would say that there are plenty of rewards and resources ready for our developers.
Q7: The price manipulation of oracle machines frequently occurs in Defi security breaches. How does Chainlink prevent and deal with security breaches, especially to prevent prices from being manipulated maliciously?
A smart contract is a data-driven tool, and its operation result is determined by the input data. As a financial smart contract, DeFi relies more on high-quality financial data. The device that sends data to the smart contract is the oracle. A DeFi project has a complete code logic, and the input parameters determine the output results. Therefore, a high-quality oracle is essential for DeFi projects. Chainlink is such a very safe and reliable oracle. Its data source comes from a highly liquid exchange or a market website. The nodes also provide quotation data in a decentralized manner, and finally aggregate them into a near-perfect price result.
The biggest challenge facing the oracle is security, which is how to ensure the reliability of the data sent to the chain. There are two aspects to reliability here. Let’s take the DeFi industry as an example. One is that the data itself is true and truly reflects the market. Many DeFi projects use DEX data so-called input, but in fact, many DEXs have insufficient liquidity and the above prices cannot reflect the real market price. Therefore, this data is sent to the DeFi contract, and it will naturally Used by hackers. Therefore, the real data must occur in real time, with high flow, and the final result produced by aggregating multiple data sources. Also, the data will not be tampered with or used by hackers during the transmission process.
Chainlink guarantees the reliability of the oracle from two major aspects: technology and system.
• First, Chainlink designed a multi-level decentralization mechanism composed of multiple independent nodes and multiple data sources. The Chainlink network has a lot of independent nodes, and these nodes can independently complete the function of transmitting data to the blockchain , Using the high degree of redundancy formed by decentralization to ensure the security of data from each oracle node. We can view all nodes on the Chainlink node market here: https://market.link/search/nodes.
• The oracle node can also fetch data from multiple data sources, which avoids the single point of failure that may occur in a single data source, such as data errors or inaccessible data sources. Users can directly use the data source selected by the oracle node, or specify their own trusted data source.
• When using, users can not only choose their trusted nodes or data sources, but also choose to aggregate the final results from multiple nodes at the same time, reducing the risk of data distortion.
• In addition, Chainlink has further organized the price data used in the DeFi industry. Chainlink officially reviewed 21 independent nodes, and selected them to provide price data of DeFi projects based on their industry reputation, financial strength, technical strength, node stability and other factors. This also avoids the possibility of witch attacks.
If you are interested to learn more, you can check the feed price data on https://feeds.chain.link/
Q8: Can you share with us what well-known projects, institutions, and companies integrate Chainlink?
I put a link to our ecosystem website here: https://www.chainlinkecosystem.com/ecosystem/
All of our current users are on this website. You can also see on the website that we have more than 1,000 integration partners. We are very proud to say that the giants in the traditional industry such as Google, Amazon, Intel, ic3, Deutsche Telekom, Hyundai, etc. are all willing to cooperate with Chainlink. We also work with UNESCO, Caring for Children, luxury brands, agricultural data providers, etc.
And in the blockchain industry, we are currently deployed on multiple public chains. Many of the well-know Defi, NFT, Gamefi projects are already our partners. We also announce 3–5 integrated projects every day, which accounts for more than half of the entire industry.
Q9: Can you share with us what you are most proud of in the Chainlink milestones? What are the next steps for Chainlink?
Here are some of our major achievements :
- The Chainlink ICO on September 2017 marks the birth of Chainlink
- Our price feed was launched in 2018
- Our mainnet was launched and operated on May 1, 2019
- Official announced to cooperate with Google in 2019, people start to recognize our brand.
- In 2020, there was an extreme price plunge in the market, tens of billions of dollars of assets were safely guarded on Chainlink, and the number of network visits reached a new high.
- OCR, Keepers, VRF, etc. will be launched in 2021
- The release of Whitepaper2.0 in 2021 will let us enter a new phase.
Next, we will proceed in accordance with our 2.0 white paper, including our CCIP, as well as the staking function that everyone cares about. At the same time, we will continue to develop the market, not only in crypto, but in traditional industries. Everyone can be our customer. In the future web3 or metaverse, Chainlink will play an important infrastructure role, just like electricity, water and other indispensable resources.
Q10: The community plays a vital role in the long-term and stable development of any project. Chainlink recently launched a community incentive program. Can you tell us about the grant program and what specific conditions we need to meet in order to apply?
This is our grant application link: https://chain.link/community/grants
First of all, we would like to thank all Chainlink community members for their tremendous contributions. It is because of your hard work that Chainlink has become the most widely used oracle network in the blockchain industry. We have played a key role in the innovation and development of smart contracts, connecting smart contracts to all environments, and continuously expanding the application scenarios of smart contracts.
Applicants for the incentive plan should devote themselves to using Chainlink in their projects to develop smart contracts with universal connectivity, and to improve the functions of the Chainlink network to provide more high-quality data for more blockchain environments. Incentives will be issued in the form of cash and/or LINK tokens.
The key evaluation criteria are as follows:
• You can lower the threshold for Chainlink network to access various smart contracts.
• You can transmit more data to the Chainlink network faster.
• You can be integrated into various blockchain environments faster.
• You can prove to users the status, security and reliability of the Chainlink oracle network.
• You are able to develop other valuable Chainlink oracle network application scenarios or smart contract functions.
We welcome everyone to actively participate in the application to accelerate the world’s popularization of smart contract applications, develop smart contracts into mainstream digital protocols, and cover all application scenarios.