The birth of the chainlink network has solved the problem of connecting information sources from the real world to the blockchain system. The article below will help you have an overview of this network, as well as the application of Chainlink in the cryptocurrency market. Let’s find out more with Learn Crypto Trading.

Overview of chainlink

Before delving into the features and products provided by Chainlink, traders need to understand the concept and how the Chainlink network works.

What is Chainlink?

Chainlink LINK is a project developed based on the Ethereum blockchain platform of crypto exchange. This is a decentralized Oracle network that acts as middleware between smart contracts and data sources outside the blockchain. This network allows smart contracts to securely access off-chain information and data sources.

How does the chainlink network work?

The way chainlink works is divided into two levels: on-chain and off-chain. The on-chain level provides a direct scaling solution and includes the following process:

• Choose the management system: Trader makes a request to search for data and manually finds the management systems that use chainlink. These management systems can bid based on the SLA (service level) of the contract.
• Data reporting: After choosing the management system, the off-chain provider will agree on the service, and transfer the requested data to the blockchain to be processed.
• Result Aggregation: The relevant suppliers will send data aggregation contracts to the requesting contracts.

Meanwhile, the off-chain level provides a non-direct scaling solution. At this level, the chainlink network creates a subnet of the Oracle node and collects information from third-party data sources. After that, the oracle nodes will work independently of each other. In the future, the system may work with smart contracts on many separate networks.

See more: DEX – What is a decentralized exchange?

What makes Chainlink attractive to many crypto traders?

Chainlink is commonly used in crypto exchanges. There are 3 particularly important reasons why this network attracts the attention of many investors:

• Technology with high practical applicability: Through API, chainlink introduces a third party to act as a bridge between the blockchain platform and the traditional digital world. This connection makes most DApps work. Additionally, it monetizes data in legacy systems.
• Diverse partner network: Chainlink works with more than 60 different partners in many fields including Decentralized Finance DeFi (SWIFT, Market Protocol), decentralized legal (Accord, OpenLaw ), decentralized transportation – logistics (Morpheus), and decentralized web (Web3, Polkadot).
• Leading in the Oracle blockchain segment: Chainlink is superior to other transaction networks in terms of technology, safety and security, and partner network,… This is also one of the reasons why Chainlink is profitable. attract crypto traders.

Outstanding features of Chainlink on crypto exchange

Features that you should not ignore when learning about chainlink  include:

• Build a general architecture of Oracle networks.
• Chainlink Node signs data with a unique cryptographic signature.
• Feed smart contracts with data from any external system. At the same time, the network also allows smart contracts to send commands to other systems.
• Works on all blockchain platforms, and is not dependent on any blockchain.
• Allows investors to determine the terms specified in the smart contract.
• Publicize Oracle node performance through on-chain signed data. Users can also select oracle nodes based on historical data.
• Integrates many optional features on LINK.

Some chainlink products on the crypto exchange

Chainlink provides a variety of different products and services. Among them, we can mention: Cross-Chain Interoperability Protocol, Data Stream, Chainlink Functions,…

Cross-Chain Interoperability Protocol solution

CCIP or Cross-Chain Interoperability Protocol is a tool that allows Web3 and DApp projects to transfer assets and data between blockchains while still ensuring safety and avoiding risks. CCIP is often used in the following cases:

• Cross-chain lending: CCIP allows investors to lend or borrow many different cryptocurrencies on many decentralized financial platforms.
• Minimize transaction data calculations to optimize costs.
• Optimize productivity and profitability on chains by transferring collateral to DeFi protocols.
• Create new DApps by taking advantage of network effects on certain chains, while exploiting the computing and storage capabilities of other chains.

See more: Opening MEXC global account in detail, quickly

Cryptocurrency market data

Chainlink is known as the leading provider of market data for smart contracts. This network is supported by reputable data providers on crypto exchanges such as CoinMarketCap, Binance, Huobi,… Data from LINK is very diverse, covering many areas such as:

• Lending crypto assets.
• General assets.
• Issuing stablecoins for traders.
• Asset management in the cryptocurrency market.
• Providing futures contracts and options contracts.

Chainlink Data Stream on Crypto Exchange

This product provides users with low-latency off-chain market information. For decentralized applications (DApps), Data Stream provides on-demand, high-frequency data access. The combination of Data Stream and Automation can help DApp automate transactions and minimize Front Running.

Automation and VRF products for crypto traders

Automation allows Web3 developers to automate smart contract functions in a decentralized way. VRF provides cryptographically secure randomness for blockchain-based applications. VRF is often used in blockchain gaming projects to create random NFT items for participants.

Chainlink Functions platform on crypto exchange

This is a platform for Web3 serverless developers. With Chainlink Functions, developers can search any data from the API, while also running custom compute on LINK’s network.

Application of chainlink in the field of decentralized finance

Chainlink is applied in many different fields, including DeFi – decentralized finance. Traditional financial products (derivative transactions, payments, asset lending) are built on the DEX blockchain, using smart contracts to increase security and demonstrate transparency. So What is DEX exchange?

The full name of the DEX is Decentralized Exchange. This is a decentralized crypto exchange, operating on a blockchain platform with smart contracts. DEX allows traders to directly manage and trade many types of coins/tokens without having to go through a third party. DeFi applications on decentralized exchanges use chainlink to value assets, interest rates, verify collateral, etc. From there, perform the functions of issuing loans, dividends, and payments. options contract.

Conclude

Hopefully, through the above article, traders have a better understanding of the network chainlink. This is a large-scale blockchain project that you should not ignore when trading on a crypto exchange. To update the latest information and trends about the cryptocurrency market, don’t forget to read the articles at Learn Crypto Trading!

FAQs

Below are some frequently asked questions when learning about Chainlink.

What sources does the chainlink network’s revenue come from?

This network collects fees from decentralized finance applications, selling LINK coins to maintain the project. Besides, chainlink is also paid by partners and receives sponsorship from third parties.

Where can investors buy LINK coins?

LINK coin is traded on many different virtual currency exchanges. The total trading volume per day is about 123 million USD. Cryptocurrency exchanges that list LINK coins include KuCoin, Binance, OKX, Coinbase Exchange, Bybit, HTX,…

How is LINK distributed?

The total supply of this network is distributed as follows: 35% will be sold in the token sale capital round, 35% will be reserved for Node Operator Incentives and the remaining 30% will be held by Chainlink Team.