Cryptocurrency Chainlink does not unreasonably cause increased interest among investors and traders. Chainlink ecosystem is an unusual project, it has its own unique features that other cryptocurrencies do not have. In this article, we will talk in detail about this coin, find out how it works, and what Chainlink oracle is.

Chainlink Working Principle

To understand what Chainlink coin is, imagine a decentralized network that includes:

• nodes;
• oracles.

Users (nodes) connected to the network. Within the system, node operators can create multiple oracles at once. And each oracle draws information simultaneously from several sources.

After that, smart contracts Chainlink provides access to the rates of different cryptocurrencies that are traded on centralized trading platforms (CEX). This data is very useful for trading on decentralized exchanges (DEX) since they allow tracking price dynamics from a variety of sources and structure data in real-time.

Chainlink and DeFi

Chainlink oracles are versatile and very common tools widely used by various decentralized applications. Most of these applications need to receive data from outside. It is important to note that building high-quality oracles is very difficult, which is why Chainlink is popular among DeFi projects.

Of course, diversification is important everywhere, so using only one, even a high-quality product, is quite risky. There is nothing perfect, so monopolization can play a cruel joke on the entire cryptocurrency industry in the future. Let’s say if most projects use one platform, and for some reason, it fails, then this can cause a real collapse.

Conclusion

In fact, Chainlink technology is one of the key aspects of DeFi and the entire crypto industry. And while there are still some risks for decentralized finance on the Ethereum network, reliable third-party data sources are an important component of the health of the system. In addition, the LINK token can be used as an investment tool. This is a long-term project, and experts believe that cooperation with reputable companies makes it a strong contender for investments that will fully pay off.