Conversations with the Coop - ChainLinkGod - Chainlink
Primer: ChainLinkGod is a familiar name on Crypto Twitter. In this episode of Conversations with the Coop, he shares his background, and the value proposition of Chainlink, and addresses the questions that Crypto Texan have for him.
Background
In early 2018, he was in the gaming community and saw GPU prices skyrocketing
Was studying Computer Science at that time
Took a first principles approach. Went from Bitcoin to Ethereum to smart contracts
Did not understand how smart contracts can execute based on things in the real world
Came across a forum thread on biz on 4chan detailing the enterprise strategy of Chainlink
In 2019, he started his Twitter account. He kept answering people’s questions about Chainlink and debunking FUD
Grew his following and became a Chainlink Community Ambassador
Dropped out of school 1 year ago. Doing this full-time now
The Story Behind His Avatar And The Significance Of Frogs In The Chainlink Community
There’s the team and the community
The team was busy building in 2017/2018
The community grew out of the infamous biz board on 4chan
The frog culture came from 4chan and was carried over to Twitter
How Did He Get Started?
Started with Reddit as his source of crypto news. It was horrible
Came across 4chan and that was where he gained a lot of his initial knowledge
Joined Crypto Twitter in early 2019
Researched everything that was available from the Chainlink team
When Compound and Uniswap launched, he realized that oracles are needed
Tried to break down complex topics to people
Shortfall Of Smart Contracts And How Chainlink Addresses Them
Blockchains are immutable
At the same time, they are isolated from the external world. They cannot connect to external systems to fetch that information
The vast majority of applications rely upon external data
Oracles are a piece of infrastructure that connects blockchains to the real world
Chainlink not only offers a connection to the real world but a secure and reliable connection
How Does Chainlink Assure Its Own Security And The Accuracy Of The Data Provided To The Smart Contract?
Through decentralization
Chainlink isn’t a single network
It's a framework where you can build decentralized oracle networks
For example, the ETH/USD price feed on Ethereum is made up of 31 independent oracle nodes that come to consensus
Nodes are incentivized to ensure the network is secure. They are paid in LINK tokens and have an incentive to operate honestly
They earn more revenue as the network expands. They do not want to devalue their holdings in the infrastructure and investment they put into the network
How Chainlink generates accurate data comes down to how the data is sourced and aggregated:
Data providers fetching data from many exchanges
Oracle nodes fetching data from multiple data providers
Chainlink network fetching data from multiple oracle nodes
Any outliers/flash crashes/deviations are filtered out through a multi-tier aggregation strategy
This is why the Chainlink network continues to perform reliably even during extreme market volatility
How Many Nodes Are Operating On The Network Currently?
Currently around 50-60
Running a node is permissionless
There are nodes that have been security reviewed and are time-tested
Associated Press and AccuWeather have launched their own Chainlink nodes to provide their own data on-chain
Swisscom and Deutsche Telekom are running Chainlink nodes
It’s more about the quality of the nodes rather than the quantity
What Smart Contracts Are Pulling Data From AccuWeather?
Parametric insurance agreements like Arbol and Etherisc
Farmers can engage in crop insurance agreements
When settlement time comes, they can query the AccuWeather Chainlink node in order to settle that agreement and payout as needed
What Other Chainlink Data Feeds That He Finds Interesting?
Proof of Reserves
It gives data on the backing of an on-chain token
For example, wrapped BTC (WBTC) has a proof of reserve feed on Ethereum indicating how much Bitcoin is backing WBTC
Verifiable Randomness Function (VRF)
To get verifiable random numbers
Usually for NFT mints
Keepers
Software to ping a contract to execute a function automatically
Cross-Chain Interoperability Protocol (CCIP)
Uses Chainlink nodes to communicate and transmit data from one blockchain to another
Could be used to create token bridges or cross-chain automated yield farms
“I think people think oracles is just about data. But really, it's about everything that a blockchain can't do.”
- ChainLinkGod
Do Arbitrage Bots Utilize Chainlink Oracles?
Would not say so. Arbitrage bots work on AMMs
AMMs do not need oracles because they are liquidity pools that are balanced by the market
How Does The Chainlink Network Defend Against Malicious Actors?
Even if a few nodes are malicious, they are not going to be able to impact any data feeds
Realistically, malicious nodes will get kicked out of the network by the users and lose all their reputation and revenue
Chainlink nodes have to lock up their LINK tokens in a contract
If they deviate, they lose their LINK tokens as punishment
Competitors To Chainlink
Have to differentiate between theoretical competitors from actual competitors
Most Band Protocol users have switched over to Chainlink
API3 is still in the process of launching
Why Do Some Protocols Use Time-Weighted Average Prices (TWAPs) Instead Of Chainlink Price Feeds?
TWAPs are when you use an on-chain DEX as your oracle
TWAPs are susceptible to flash loan attacks. A lot of protocols got wrecked by using TWAPs a few years ago
TWAPs are a lagging indicator. It prioritizes tamper resistance over accuracy
In periods of market volatility, it takes a long time for the price to catch up to that point
TWAPs don’t provide market coverage as it is only tracking a single trading pair on a single DEX
Chainlink provides fresher data as it is current volume-weighted price
How Can A Low Liquidity Token Get A Chainlink Price Feed Implemented?
When a token is launched, projects begin to implement products around it
Because of the low liquidity, the price could be easily pushed in either directions, even if there’s a market-wide price
Ideally, you do not want to use a token in a financial product that requires a price feed if there's not enough liquidity for it
Sometimes, projects use a TWAP price as an initial source of price data. Once they have enough liquidity, they would upgrade their system with a Chainlink price feed
Is Chainlink DeFi? Is It Web3 Infrastructure?
Think of it as infrastructure
Which Blockchains Does Chainlink Provide Data Feed For?
Full list is in the Chainlink docs
About a dozen primary blockchains: Ethereum, Polygon, BSC, Avalanche, Arbitrum, Optimism, Polygon, Starkware, Heco, Gnosis chain, etc.
The next push will be on non-EVM chains like Terra and Solana
Is Web3 Infrastructure Misunderstood By The General Public?
Every community has its own niche and will get filled up over time
Protocols that are focused on the long-term are more likely going to succeed
Chainlink And ZK Technology
There are 2 approaches:
Chainlink is already supplying feeds to dYdX, which is a standalone ZK Rollup chain. Chainlink will scale up with any ZK Rollup that launches in the future (e.g. zkSync, StarkNet, etc.)
Chainlink uses ZK knowledge in DECO, a privacy-preserving oracle solution where you're able to prove that a specific piece of data came from a specific source without actually revealing the data itself. DECO will introduce a lot of enterprise-type use cases
Chainlink Roadmap
Staking
Will be rolling out next year
Enables LINK tokens to be locked up to earn yield from user fees
CCIP
Many cross-chain use cases will be enabled by CCIP
Will be a significant revenue source for the network
Over The Longer Term
Enterprise abstraction layer — providing a way for enterprises to integrate themselves with blockchains
“You don't have to take a blockchain winner. You just integrate Chainlink and now you're future-proofed against any blockchain that pops up in the future since it'll be supported by Chainlink.”
- ChainLinkGod
SmartContent777 On Twitter
A publication by Crypto Oracle and himself
Focuses on different topics about Chainlink
What Projects Are Catching His Eye Right Now?
Ethereum — the combination of the merge lowering issuance, the increased burning of fees from EIP-1559, plus the rollout of Rollups
Will turn Ether into a very strong asset where it’s net deflationary and yet sustainable
Have been observing the Curve Wars. Remains to be seen which stablecoin will win out
What Are Some Protocols That Are Utilizing Chainlink That He Finds Interesting?
Aave — they have always been an innovator and a pusher. They have popularized flash loans
Synthetix — they focus on futures and synthetic assets. They are moving to L2s and adding more assets that are powered by Chainlink price feeds
Is The Future Multi-Chain Or Cross-Chain?
People have questioned the cross-chain thesis because of the number of bridge hacks
Chainlink CCIP will solve the bridge hack issue
Thinks that the future is both multi-chain and cross-chain
Thoughts On Arbitrum Nitro
Arbitrum and Chainlink are working closely together on Fair Sequencing Services (FSS)
Once Chainlink launches FSS, Arbitrum will be decentralizing their sequencer and use that to bootstrap transaction ordering guarantees
Will reduce costs for Arbitrum and make things more compatible and efficient
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