Thread by @ChainLinkGod

1/ As promised, here is the thread giving context into each of the amazing slides created by the @Chainlink team created and which @SergeyNazarov recently presented with

The full slideset can be found here
drive.google.com/file/d/1wAj6QE…

#Chainlink $LINK

2/ ALL blockchains suffer from the "Oracle Problem"

From Ethereum to Bitcoin to Hyperledger to Tezos to Cosmos to Harmony to Kava to Conflux to Polkadot to Zilliqa to Icon to Hedera Hashgraph to Ontology to Solana and beyond

They all require oracles for external data

3/ Smart Contracts (SCs) on their own have zero access to the external real world data they need to execute including market data, events data, retail payments, bank payments, and more

4/ The Smart Contract space is currently largely defined by creating tokens (e.g. 2017 ICO boom, 2019 DEX growth), not because tokens were the goal, but because tokens are a native "out of the box" functionality of Smart Contract platforms like Ethereum

5/ The vast majority of contractual agreements require external information beyond just ownership (tokenization)

Once SCs have secure access to external data, growth will explode and distribution of tokenization vs real world events related contracts will look very different

6/ Smart Contracts originally started out very simple as multi-signature "wallets" on Bitcoin $BTC which required multiple parties to sign off on a transaction

Later the $NXT blockchain introduced specialized low level protocol opcode smart contracts for more functionality

7/ These low level opcode-based smart contracts were extremely limited as new opcodes had to be added to the L1 protocol itself through a hard fork!

Ethereum $ETH introduced programmable smart contracts which could be written in solidity and required no hard fork to deploy

8/ Scriptable Smart Contracts were much easier to write and could be deployed by anyone, but it was like a computer without an internet connection

Chainlink $LINK introduced decentralized oracles enabling these same scriptable smart contracts to access any and all external data

9/ Decentralized Finance #DeFi has been absolutely exploding in growth to now ~$1B in total value locked defipulse.com

90%+ of DeFi inlcuding @MakerDAO @synthetix_io @compoundfinance @AaveAave @bzxHQ @NexusMutual and more REQUIRE external oracles to exist

10/ Smart Contracts are actually are two separate different parts

First is the on-chain code that runs the predefined business logic (rules of the dApp)

Second is the off-chain oracles for connecting to external data, enterprise systems, and traditional fiat payments

11/ External data includes Bloomberg, Reuters, NYSE, CoinMarketCap, Kaiko, Alpha Vantage, Easypost, Google BigQuery, etc

Enterprise systems includes Salesforce, Oracle, SAP, Microsoft, Docusign, etc

Traditional payments includes Citi, Visa, Mastercard, HSBC, SWIFT, Paypal, etc

12/ In order for Smart Contract to be fully trustworthy, it needs to be secured end-to-end from inputs to outputs (I/O)

If just the on-chain code is secure but the I/O isn't, then the entire contract is worthless, insecure, and not useful to anybody

13/ Smart Contracts require I/O of varying types and functionalities

Inputs can range from traditional market data, crypto prices, ANY Web API, and more

Outputs can range from enterprise systems, traditional payments, crypto payments, and more

14/ Chainlink's approach to reliable and secure oracles includes

Decentralization
Provably Secure Nodes
High Quality Data
Cryptoeconomic Security
Defense in Depth
A Large Open Source Community
Connecting any blockchain environment to all inputs and outputs

15/ This hopefully isn't news to you, but centralized oracles are a single point of failure that defeats the whole purpose of using smart contracts that run on a decentralized blockchain in the first place

Centralized oracles are not a legitimate solution to the oracle problem

16/ A Decentralized Oracle Network requires many independent sybil resistant nodes who need to come to consensus

Anybody can build their own Chainlink network using any nodes they desire and deem trustworthy, but this trust barrier will lower with new features and more data

17/ The Chainlink Market is a permissionless community marketplace where any node operator or data provider (sometimes the same entity) can list their services offered and developers can use this information to build their own Chainlink oracle network

market.link/nodes/eaa65e96…

18/ Binding Service Agreements are on-chain commitments signed by each oracle node in a network enforcing high security and high quality data standards

Both the commitment and final performance of such commitment are immutably stored on-chain and are fully verifiable

19/ A cryptographically provable performance history enables requesters to use this on-chain information about nodes to determine which are reliable and which are not

Unreliable nodes will no longer be selected due to their poor performance and they will lose all future revenue

20/ Binding Service Agreements also enable cryptoeconomic security through staking $LINK

Slashing conditions for this stake are agreed to beforehand by all parties ensuring there is an economic punishment for misbehavior, data inaccuracy, or any other predefined condition

21/ The "Web of Trust" model provides context on a node's reliability and includes information aggregated across many chains

Usage by multiple real dApps is a signal of trust and having many highly used and reputation sensitive nodes makes for a stronger network overall

22/ Decentralization at the node operator level is incredibly important but so is the decentralization at the data source level

Pulling from a single data source, even from many nodes, is still a single point of failure so data should be aggregated across many data source APIs

23/ Putting this all together creates a decentralized oracle framework that enables truly Decentralized Finance apps that contains no single point of failure

many Exchanges -> many Data Providers -> many Chainlink Nodes -> many Reference Contracts -> many DeFi Applications

24/ Not only does Chainlink support a multitude of different blockchains for off-chain data to be sold to, but Data Providers can either run their own Chainlink node directly and/or they can sell their APIs, business as usual, to other Chainlink node operators

25/ There are currently 31+ Reference Data Networks #PoweredByChainlink live on Ethereum mainnet today!

This includes USD and ETH base pairing for assets including cryptocurrencies, stablecoins, commodities, indices, and more

Check them out at feeds.chain.link

26/ What this all means is that @Chainlink is a framework for building decentralized oracle networks to connect any blockchain to all inputs and outputs required by smart contracts

Flexibility and diversity is key here, data providers can now sell data to every blockchain

27/ A great example of what is now possible is a Smart Crop Insurance Contract

Multiple weather data sources are read by a decentralized oracle network and fed into a smart contract on any blockchain, afterwards off-chain payments can be triggered in wildly accepted formats

28/ Chainlink is an idea meritocracy where the best ideas win

The team has been growing rapidly but they're always looking for talented folks to join them on the mission to solving the oracle problem practically once and for all

You Just Win

29/ And that's the thread!

Hope you enjoyed reading this brain dump my frens, these are some incredibly informative slides overall, you can make your own conclusions

The great part is that this is just a tiny fraction of what Chainlink can and will be leveraged for :)