What is it
ChainLink aims to provide decentralized oracles or data inputs for smart contracts. In most current cases, smart contracts use information from data inputs that are controlled by central entities. Those smart contracts have central points of failure, which defeats some of their intended purposes of decentralization. ChainLink creates an infrastructure for secure and decentralized data inputs by encouraging a distributed set of oracles by using the LINK token as an incentive.
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Why is it important
While not all smart contracts do not necessarily need decentralized data inputs, some dapps or smart contracts are contingent on their decentralization. ChainLink offers a way for those smart contracts to operate in a way that is completely decentralized without having to worry about a central point of failure or censorship.
How does it work
ChainLink ensures decentralized and secure smart contract data inputs by using several different data sources, several different oracles, and the complementary use of trusted hardware.
What is the point of the token
LINK is used to pay node operators to retrieve data from off-chain data feeds and putting that data into the blockchain. Basically, in order for a dapp or a smart contract to use ChainLink, they have to pay the decentralized oracles in the form of LINK.
If decentralized systems become popular, decentralized oracles will be necessary. Unfortunately, there is not much need for decentralized oracles at this moment. ChainLink presents a reasonable way of achieving decentralized oracles in its whitepaper but has not shown that its solutions is viable or useful in practice, making it a highly speculative project. The high potential for projects working on decentralized oracles make them very attractive.