As demand for smart contracts grows, the Oracle Chainlink for Substrate modular platform aims to provide developers and defining applications with the reliable off-chain information and pricing data needed to win projects for Polkadot and Kusama.
An increase in final and smart contracts beccon – a new level of confidence
As the smart contracts revolution gains momentum, the cracks and vulnerabilities in the existing infrastructure supporting these transaction protocols become more apparent. When it comes to the biggest challenges of smart contracts, the focus is on cost and security.
To expand and develop these unique protocols, not just address their weaknesses, smart contracts must essentially become smarter. However, given the limitations of blockchain validation to maintain stability and security, there is a barrier to obtaining information outside the project chain.
In smart contracts, the execution of the contract terms may depend on external data (e.g., price) that may not be available in the corresponding block that hosts the contract itself. Not only does this cause unique headaches for developers, but it also systematically limits the use cases for smart contracts.
Chainlink has provided an answer among the revolutionary solutions that have followed the introduction of oracles into the blockchain world. The basic idea behind Oracles is to connect trusted external data sources with smart contracts, providing the missing link between the on-chain and off-chain worlds.
Implementation of the smart contract depends on access to and availability of data
Just as an API can connect two separate systems and share information, Chainlink can similarly connect smart contracts to external data sources. Like the principle that centralized information sources can be biased, the idea behind Chainlink is to decentralize the input and output of information. This maintains the commitment to creating open source resources for developers that a controlling entity cannot compromise.
One of Chainlink’s main applications is price information, especially in the field of decentralised financial (defi)applications. Loan and credit protocols like Aave are already pulling pricing information from Chainlink to help make decisions and set terms for smart contracts. The architecture of oracles is such that they effectively form an additional layer on top of the existing blockchain, meaning that they do not compromise the integrity and security of the first layer.
However, Oracle has many more applications than Defi. It can retrieve any information, for example B. Weather conditions, sports results and economic trends, to name a few. To make these protocols operational and enable wider application, intelligent contractual access to data sources outside the chain is paramount.
Since Oracle Chainlink launched on Ethereum in 2019, it has become a staple of popular Defi projects. Oracle is now adapting to other blockchains as the project strives to maintain its agnostic stance. The latest iteration, developed for Polkadot and Kusama’s Substrate development framework, works a little differently than previous versions.
Unlike the Ethereum version of Chainlink, where nodes communicate price information, Kusama and Polkadot parachutists can individually decide whether to accept Chainlink’s price data. By including their specific module, called a palette, developers can effectively integrate Chainlink data into their respective smart contract applications.
For polkadot defi projects like Acala, this means that their parachute can opt for a modular oracle activation. However, drop-in projects that do not require access to data are not required for module integration. This means that they do not have to supply chain resources for Chainlink.
As Defi projects seek greener pastures for more favorable cost structures and scalability, the integration of Polkadot and Kusama Chainlink will allow smart contract developers to make an even easier leap. Meanwhile, many alternative Oracle-oriented projects, such as Band, DIA, API3, compete with Chainlink by offering similar services.
How do you see the impact of off-chain oracle information on the use of smart contracts? Let us know your comments in the section below.
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