What is Chainlink (LINK) and what is it used for?

Chainlink is a decentralized oracle network: a group of independent operators that bring real-world information onto blockchains. So what is Chainlink used for? Smart contracts use it to read things like asset prices, generate random numbers and talk to other blockchains. Its token, LINK, pays the operators who do this work.

What is a Chainlink oracle?

Blockchains are deliberately cut off from the outside world. That isolation makes them hard to tamper with, but it means a smart contract cannot look up a stock price or a sports score on its own. An oracle is the service that fetches that data and delivers it on-chain.

Relying on a single oracle is risky, because one faulty or corrupted source could feed a contract bad data and cause losses. Chainlink's answer is a decentralized oracle network, in which many independent node operators pull from multiple data sources and combine the results. Chainlink says lending apps such as Aave use its price feeds to value collateral.

What is Chainlink crypto, the LINK token, used for?

LINK is a token on Ethereum with a total supply of 1 billion. It follows a standard called ERC-677, which keeps all the features of the common ERC-20 standard. Users of Chainlink services pay node operators in LINK. Holders can also stake LINK, which Chainlink describes as a service-level guarantee that encourages operators to behave honestly.

Besides price data, Chainlink offers Proof of Reserve, which checks whether a token is backed by the off-chain assets it claims; VRF, a source of verifiable randomness used in games and NFT drops; and Automation, which triggers contract functions on a schedule or condition.

What is Chainlink CCIP?

CCIP stands for Cross-Chain Interoperability Protocol. It lets developers send messages, move tokens and trigger actions across different blockchains. It launched in 2023.

Banks have tested it. In August 2023, Swift, the global bank messaging network, said experiments using CCIP had shown that its existing systems could connect to public and private blockchains. Participants included BNY Mellon, Citi, BNP Paribas, Euroclear and the DTCC. For a broader look at moving assets between chains, see our guide to crypto bridges.

What is Chainlink Labs?

Chainlink was founded in 2017 by Sergey Nazarov and Steve Ellis, and Cornell professor Ari Juels co-wrote its white paper. The project raised money through an initial coin offering that year, and its main network went live on May 30, 2019.

Chainlink Labs is the company that does most of the core development. It employs the main engineering teams and supplies some of the signers on the multi-signature wallets that control upgrades. The oracle network itself is run by many independent node operators rather than by Chainlink Labs alone.

Crypto prices are volatile and a token like LINK can lose most of its value.