A rapid, groundbreaking technology with far-reaching benefits is precisely what Chainlink’s announcement to upgrade its network entails.
Chainlink came up with the Off-Chain Reporting(OCR), which brings ten times more data on-chain to boost DeFi products and services. The OCR has been in implementation already but was only just officially announced.
OCR Provides 10x Data
When Chainlink launched in 2019, it did so with three approved oracles, including its own. Since then, tons of water has flowed under the bridge. Nazarov said the “DeFi Summer” – an ongoing surge in total values embedded in the DeFi app starting in July 2020 – correlates strongly with Chainlink and provides more data at that point.
The reason is that many of these DeFi protocols rely heavily on external data, and data availability is highly dependent on Chainlink. Nazarov added that between 50% and 80% of DeFi apps use Chainlink’s data, which makes upgrading their service very important.
So, OCR changed the way data from multiple sources was collected from the Oracle network. Previously, collecting different measured values from the same input signal – for example, the token price – was carried out along the chain. The chainlink nodes present their data values, verified by smart contracts for Ethereum and other blockchains. Although this approach ensures data reliability, it is inefficient in terms of gas costs because each node must devote resources to publishing data.
The new architecture replaces chain aggregation with consensus circles outside the chain. As a result, the aggregated data passes to the blockchain, where the smart contract checks whether the quorum nodes approve of that version of the data.
Venturing in What Blockchains Don’t
The one area Chainlink is currently focusing on is DeFi, said Nazarov, based on customer demand. Chainlink offers data feeds, the most extensive data on-chain price reference data available.
A group of third-party application developers sponsor the feeds. As Nazarov explains, the reason is how app developers work together to provide security. Each additional sponsor pays a fee that is lower than the price of the network they use.
But then pay their shared costs together for more protection for everyone. All of these costs go to the node operator. None of these costs go to Chainlink unless it is a node operator.
Since Chainlink has published the OCR White Paper, it is sure to attract experts in the field. The Oracle Chainlink framework appears to be a key element in the growing blockchain application ecosystem.
Chainlink was named one of the World Economic Forum’s Top 100 most promising technology pioneers in 2020. Meanwhile, its LINK token, which hit new highs this month, was one of 2020s most effective crypto assets.