We can now build decentralised systems that work without middlemen thanks to blockchain technology, but there was still a crucial component missing: the capacity to access actual data. Oracles filled this void and have since grown to be a crucial component of the blockchain ecosystem. Oracles allow smart contracts to receive data from off-chain sources like data feeds, APIs, and other external sources.
A blockchain network receives external data from an Oracle, a third-party service. It works as a link between on-chain smart contracts and off-chain data sources. Because they allow smart contracts to access data from outside the blockchain network, oracles are essential to their functionality. Oracles come in two flavours: centralised and decentralised.
In smart contracts, the conditions of the contract between the buyer and seller are directly encoded into lines of code, making them self-executing contracts. When specific requirements are met, they automatically execute an agreement. Oracles allow smart contracts to access data from off-chain sources including data feeds, APIs, and other sources.
Chainlink's Advantages as a Decentralized Oracle Network
1. Chainlink 2.0: Chainlink 2.0 is the next major version of Chainlink's decentralized oracle network, which has already been launched. It features several new capabilities, including support for off-chain computation and a more user-friendly interface. Off- chain computation enables smart contracts to perform more complex calculations without incurring high gas costs on the blockchain.
2. Chainlink VRF: A solution that offers a secure and auditable source of randomness for blockchain applications is Chainlink VRF (Verifiable Random Function). There are many applications for it already, including gambling, lotteries, and other things. A provably fair source of randomness is offered by Chainlink VRF, which is necessary for many blockchain-based applications.
3. Chainlink Keepers: This approach enables smart contracts to run automatically in response to outside events. It has already been introduced, and its applications include supply chain management, automated trading, and more. Smart contracts can respond more quickly to events in the real world thanks to Chainlink Keepers, increasing their practicality and adaptability.
4. Chainlink Bridges: Chainlink Bridges is a programme that makes it possible for various blockchain networks to communicate with one another. Although it hasn't been fully launched yet, it is currently under development. Chainlink Bridges will make it simple to transfer assets between various blockchains, creating a more integrated blockchain economy.