ChainLink are providing DApps with quick and secure connections to a wide range of off-chain data and systems from weather indexes to Tesla APIs to Esports results. They have provided docs, which helps users to learn how to call any external API to augment the value of the smart contract.
Sergey Nazarov in his recent interview on Pomp Podcast recollected on how he has been building smart contracts now for over 7 years. He recollects on how through that time he has built contracts for large financial institutions and insurance firms.
He stated that he has written his own contracts, which have got adoption. He further stated that it was then, he came across the oracle problem, and the problem of how the contracts connect to external systems.
In this regard, Sydney Ifergan, the crypto expert tweeted: “ChainLink (LINK) are literally connecting the entire world by facilitating reliable off-chain data.”
He pointed to how connections to external systems are quite important because smart contracts are being separate from the world of other insecure systems. So, smart contracts and block chains generally only know about what is inside of them, and the ability of them to know what is outside of them is what enables things like DeFi and decentralized insurance. He stated that he has been working on these use cases for a number of years.
Sergey Nazarov, stated that he basically have been focusing his time and energy on the body of work around oracles. And, that oracles are the technology that solve these problems.
He pointed to how they allow you to retain the security of a smart contract, and its extreme reliability, while connecting it to less secure systems like data feeds and various other systems that one contracts, and guarantees that those systems do not manipulate the contract.
So, basically, the contract can just get data about market events and for any number of other data points and that enables new types of contracts to come in to existence. Of which, DeFi and Decentralized insurance are the two most prominent examples, but there is many others.
When Sergey Nazarov was asked on what is Defi and what is driving the growth of the DeFi industry right now? He stated Decentralized Finance is the taking of existing financial products and replacing them off on to the blockchain infrastructure. He also pointed to how there are other categories like lending protocols.
Decentralized finance are a redefinition of what blockchains and smart contracts are doing to include financial products. So, far smart contracts and blockchains have been predominantly about let’s make a token. And tokenization has been the predominant focus of these technologies, which is fine because tokenization generally brings in a lot of value to the ecosystem that can be put in to various formats. But at the end of the day that is not want smart contracts and blockchains do.
And, what decentralized finance is the creation of financial products usually around the crypto asset format in tokens like Bitcoin or other tokens and it generates an ecosystem of financial products around the tokens that came out of the first tokenization. It is a very important evolution because the evolution this time is not about the creation of more tokens, though that might be a side effect of evolution.
The evolution now is about block chains and smart contracts being used to make financial products, which provide value regardless of the token, collateral or the asset. And this is where blockchains and smart contracts begin to deliver on the promises that the global financial systems takes to deliver on, but because of certain technical limitations this is enabled to.
A finance graduate, Maheen Hernandez has been drawn to cryptocurrencies ever since Bitcoin first emerged in 2009. Nearly a decade later, Maheen is actively working to spread awareness about cryptocurrencies as well as their impact on the traditional currencies. Appreciate the work? Send a tip to: 0x75395Ea9a42d2742E8d0C798068DeF3590C5Faa5
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