The new Chainlink architecture proposed decentralized oracle networks that can off-chain computations and reduce the on-chain logic load. Besides, it also talks about the use of hybrid smart contracts.
On Thursday, April 15, oracle service provider Chainlink (LINK) released a new whitepaper with a plan of expanding into new horizons and creating next-generation decentralized oracle networks. This proposal would mean Chainlink generalizing its oracle network into a “meta-layer” of Decentralized Oracle Networks.
Over the last years, Chainlink has established itself as the Gold standard for sourcing data to the DeFi industry. Some of the top tech companies like Google have also used Chainlink oracles solutions to source data from their off-chain cloud networks to on-chain blockchain platforms.
New Chainlink Whitepaper
The Chainlink 2.0 architecture comes with a larger selection of use cases. It also aims to expand its suite of services to other off-chain computation of data. The Chainlink 2.0 whitepaper suggests that these computational oracles will create a class of “hybrid smart contracts” wherein part of the logic is offloaded to them. It also notes that Chainlink would generalize and extend its computation abilities:
“The extension here is really in the fact that you can put an arbitrary executable in an oracle network for it to run that. And this greatly expands what an Oracle network can do.”
Chainlink co-founder Sergey Nazarov explained that the new oracles will specifically focus on functions that even the layer-two solutions are unable to perform. Nazarov said that this is a “big leap forward because it redefines what people can build”. He further added:
“Oracle networks go far beyond delivering highly validated data, they provide the various decentralized services that are combined with smart contracts to create real world outcomes. These hybrid smart contracts are already redefining our industry as DeFi”.
Hybrid Smart Contracts Already Existing in Blockchain Space
The Chainlink co-founder clarified that the platform is not trying to re-invent the wheel. Neither is it attempting to replace existing blockchains and other layer-two solutions. It just aims to flexible and a customizable solution that can compute data.
The Chainlink 2.0 architecture aims to scale existing decentralized applications and even roll-up schemes and other layer-two solutions. Besides, each individual user also gets the choice of node and consensus mechanism. The whitepaper notes:
“The Chainlink network is a configurable set of validators that can be configured to do whatever the hell you want them to. […] It’s not a blockchain. They [the validators] don’t give you the state and all the guarantees of a blockchain, but they can give you every other type of computation that you want to configure them into doing.”
Also, as said, Chainlink is not the first to implement hybrid smart contracts. In the past, the Paxos stablecoin operator has already implemented these smart contracts. However, the hybrid smart contracts from Chainlink will lead to the concept of Decentralized Oracle Networks (DON).
DON will operate off-chain wherein data within the smart contracts are stored and computed off-chain. “We’re evolving from simpler oracle networks into more advanced Oracle networks called DONs, and then a large collection of DONs will form a MetaLayer,” said Nazarov.
The MetaLayer brings plenty amount of off-chain resources. This includes high-frequency updates for price feeds as well as security for NFTs.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.