What is Chainlink (LINK)?

In the blockchain world, smart contracts enable secure and automated transactions. However, they lack the ability to access data from the outside world on their own. This is where Chainlink comes in: it acts as a bridge connecting smart contracts with real-world data. Chainlink, which carries a wide range of data from financial market data to weather information and even match results onto the chain, expands the boundaries of blockchain technology with its decentralized oracle infrastructure. In this article, we will take a detailed look at what Chainlink is, how it works, and why it has become indispensable for the Web3 ecosystem.

Chainlink's Definition and Origin

If you think smart contracts can only operate within their own closed systems, Chainlink is the magical bridge that changes that. So, what is Chainlink? What is the LINK coin, the platform's cryptocurrency? In the simplest terms, Chainlink is a decentralized oracle network that enables smart contracts to access external world data. The potential of smart contracts is enormous, but by their very nature, they are limited to the data available on the existing blockchain. In other words, a smart contract cannot independently access information about real-world events (such as the outcome of a sports match, the price of a commodity, weather conditions, or whether a payment has been made). This is where the Chainlink oracle system comes into play.

Off-chain data (weather, finance, API, price data, etc.) is transferred to smart contracts, allowing them to be triggered and executed based on real-world events. This solves the “oracle problem,” which refers to the inability of blockchains to connect to the outside world. Chainlink establishes this connection in a decentralized and reliable manner, enabling smart contracts to become much more advanced and useful.

The Chainlink project was launched in 2017 by Sergey Nazarov and Steve Ellis. They are also the authors of a whitepaper introducing the Chainlink protocol, co-written with Cornell University professor Ari Juels. The founding team recognized that today's financial system largely relies on “paper promises”—traditional agreements made through documents that can be easily violated—and that this poses significant risks. They believed that smart contracts, which operate automatically and enhance transparency and trust between parties, could offer a safer and fairer system. With this vision in mind, they set out to address an urgent issue facing the blockchain industry: the lack of access to real-world data.

Although it started on Ethereum, Chainlink's architecture was designed to support multiple networks and now has cross-chain communication capabilities that allow it to work with different blockchain networks. This has transformed Chainlink from a project tied solely to Ethereum into a foundational infrastructure layer for the entire blockchain ecosystem. The answer to the question “What is an oracle network?” is that, like Chainlink, these are decentralized networks that provide external data to smart contracts. Chainlink is a leader in this field.

In other words, Sergey Nazarov and Steve Ellis' vision was to build a world based on cryptographic accuracy after seeing signs of declining trust in traditional institutions. Chainlink Labs was introduced as the organization responsible for developing and promoting the project.

Chainlink's History: Key Milestones

Chainlink's journey is not merely about establishing an oracle network; it is also a process of pushing the boundaries of blockchain technology and building a reliable bridge between the real world and the digital world. This project, which has continuously renewed and developed itself since its inception, has become one of the cornerstones of Web3 infrastructure. Here are the key milestones and technological advancements that have brought Chainlink to its current strong position...

• 2017: Chainlink conducted an Initial Coin Offering (ICO). During this ICO, 350 million LINK tokens were sold, raising 32 million dollars. Additionally, it is noted that a total of 61 million dollars was raised through a private sale. During the founding period, the maximum supply of the token was also discussed, as a total of 1 billion LINK tokens were set as the maximum supply.
• 2018-2020: Chainlink enhanced its oracle capabilities by integrating various technologies from Cornell, such as Town Crier and DECO. Town Crier connects Ethereum to web sources using HTTPS, while DECO uses zero-knowledge proofs to verify the accuracy of data without revealing sensitive information.
• 2019: The Chainlink Mainnet launch took place. This was a significant step in enabling smart contracts to securely interact with real-world data. Additionally, this year saw Chainlink's first major integrations. In December 2019, Synthetix integrated Chainlink's decentralized oracle network, beginning to provide price feeds for its synthetic assets through Chainlink. This integration was one of the first major steps highlighting the importance of oracle solutions in the DeFi ecosystem. In the weeks bridging 2019 and 2020, Aave partnered with Chainlink to begin providing price data to its protocol through Chainlink's oracle network. This integration enabled Aave to use more reliable and decentralized price data in its lending protocol.
• 2020: With the rapid growth of the DeFi ecosystem, the need for reliable and up-to-date price data increased. Chainlink data feeds saw heavy demand during this period. DeFi protocols began using Chainlink's price feeds to manage loans, trade derivatives, and determine collateral ratios for assets. Chainlink quickly became the industry standard for DeFi.
• 2021: The Chainlink 2.0 whitepaper was published. This paper detailed the vision to expand the role and capabilities of decentralized oracle networks to include hybrid smart contracts that utilize on-chain code and off-chain services provided by oracle networks.
• 2022: Additional services such as Chainlink Keepers and VRF were introduced. Chainlink Keepers (now called Automation) enable smart contracts to automatically perform maintenance tasks when certain conditions or time intervals are met. This makes it possible to execute smart contract functions without the need for a centralized automation tool. Chainlink VRF (Verifiable Random Function) generates verifiable, tamper-resistant random numbers for applications that rely on unpredictable outcomes, such as games, NFT minting, or random assignments. The verifiability of randomness ensures that results are fair and transparent.
• 2023: Chainlink Cross-Chain Interoperability Protocol (CCIP) was launched. CCIP is a global cross-chain communication standard that enables secure message (data) and token transfers between blockchains. This protocol aims to establish a bridge between different blockchain ecosystems and traditional financial systems, allowing liquidity to flow freely and enabling institutions to interact with blockchain without changing their existing systems. Leading DeFi protocols such as Synthetix and Aave are among the early adopters of CCIP. Additionally, the collaboration with Swift, the global leader in financial messaging services, demonstrates CCIP's potential in the traditional finance sector.

• 2024-2025: Chainlink continued to strengthen its Web3 infrastructure. In 2024, the Synthetix v3 release began offering faster and more accurate price feeds by integrating Chainlink's Data Streams feature on Arbitrum. In 2025, Aave integrated Chainlink's Smart Value Recapture (SVR) feature on the Ethereum mainnet. This integration aims to increase protocol revenues by enabling the recovery of oracle-sourced MEV revenues. In addition, Chainlink's Cross-Chain Interoperability Protocol (CCIP) has been implemented in over 300 projects and has facilitated over $2.2 billion in total volume transfers. Chainlink Runtime Environment (CRE) has also made it easier to develop Web3 applications by giving developers the ability to create more flexible and modular applications.

Chainlink's history shows that the answer to the question “How does Chainlink work?” has been constantly evolving. The project has evolved from its initial oracle functions into a much broader Web3 services platform encompassing automation, randomness, and cross-chain communication. In addition to being an indispensable infrastructure provider for DeFi data solutions, it has become the standard for smart contract data input. The question “What is Chainlink CCIP?” refers to one of the project's newest and most exciting steps: the vision of building an “internet” between blockchains. This technology plays a significant role in the field of cross-chain bridge technology.

Why is Chainlink valuable?

Chainlink's value is linked to many factors. As we mentioned earlier, the project's fundamental promise is to integrate real-world data into smart contracts in a secure and transparent manner. This ensures that smart contracts are not only theoretical but also practical. For a smart contract to automatically make payments based on the outcome of a football match or for an insurance contract to pay compensation based on specific weather conditions, these contracts must have access to reliable external data. Chainlink provides this data through decentralized oracle networks, eliminating a single point of failure and reducing the risk of data manipulation.

Chainlink serves as a fundamental infrastructure provider in DeFi, insurance, gaming, NFTs, and enterprise applications. It is noted that Chainlink has enabled trillions of dollars worth of transactions in DeFi, provided fair randomness in gaming and NFTs, and helped traditional financial institutions interact with tokenized assets and blockchain. The project shows that over 2,300 projects are part of the Chainlink ecosystem and that it enables a total transaction value of over $20 trillion. These figures point to a blockchain project of considerable size.

So, how does this network work, and who provides this service? The Chainlink network consists of independent node operators that provide data feeds. What is a Chainlink node? Nodes are servers that retrieve, verify, and transmit external world data to the blockchain. Chainlink data providers are these node operators, and they are rewarded with LINK tokens for their work. Node operators can set their own fees for their services.

Various mechanisms are used to ensure data accuracy on the network. Smart contracts typically ensure accuracy by collecting data from multiple oracles rather than a single one, and then aggregating the results. This data collection process checks whether the information from multiple sources is consistent and filters out unreliable data. Additionally, Chainlink uses a reputation system. Node operators are rated based on their reputation scores, and those with better reputations are more likely to be selected.

Another important layer of security is the Chainlink staking system. Node operators “stake” a certain amount of LINK tokens to demonstrate their commitment to the Chainlink network and to be incentivized to provide good service. If a node operator acts maliciously or provides incorrect data, they may lose part or all of the LINK tokens they have staked (slashing). This is known as a crypto-economic security layer that incentivizes nodes to behave honestly. Nodes that stake more LINK have a higher chance of securing larger and more profitable data contracts. While the staking feature is currently primarily active for node operators, community stakers can also contribute to the network's security and earn rewards.

One of the recent developments enhancing Chainlink's value is the Chainlink Cross-Chain Interoperability Protocol (CCIP) mentioned earlier. CCIP enables not only data transfer but also asset transfer and programmable token transfer between blockchains. This allows DeFi protocols or other applications on different chains to interact securely with one another. For example, a user can transfer their tokens from one chain to a credit protocol on another chain and send instructions on how those tokens should be used in the same transaction. CCIP also plays a key role in the vision of connecting the traditional financial system to blockchains. Sergey Nazarov has stated that CCIP is the cross-chain solution needed to grow the on-chain economy by 10 times for both DeFi and banking developers.

Considering all these features and applications, the answer to the question “What is the LINK token used for?” is quite comprehensive. The LINK token is more than just a payment tool; it is a fundamental asset that secures the network, incentivizes node operators, and enables the Chainlink ecosystem to function. The value of LINK is tied to the expansion of the network's use cases and the increasing demand for oracle services. Chainlink's current market position and adoption rate are important factors supporting the value of LINK. Core services like Chainlink price feeds form the foundation of DeFi and other on-chain applications, and payments for these services are made in LINK. This creates a natural demand for LINK. In short, Chainlink acts as the “backbone” for web3 data infrastructure.

Finally, it's worth mentioning LINK's price. The coin is trading at around $13-14 as of May 2025. Considering that its all-time high was $52, this level isn't very encouraging, but the project already stands out for its technology.

Who is the Founder of Chainlink?

The minds behind a groundbreaking project like Chainlink are intriguing. The answer to the question of who is the founder of Chainlink? is the two names that shaped the technical and business development vision of the project: Sergey Nazarov and Steve Ellis. Sergey Nazarov is the co-founder of Chainlink and the CEO of Chainlink Labs. He is a serial entrepreneur and a pioneer of Web3. His past work has primarily focused on decentralized technologies. He has been involved in projects ranging from smart contract-powered asset exchanges to decentralized email communications. It is worth noting that Nazarov has frequently made public statements about Chainlink’s widespread adoption and integration with traditional financial systems.

Steve Ellis is the co-founder of Chainlink and the CTO of Chainlink Labs. He has an extensive software engineering background and a passion for entrepreneurship. Ellis has specialized in solving difficult technical problems for over 10 years. He is also known for pushing the boundaries of what is possible with code. He previously worked with Nazarov on the Secure Asset Exchange platform. Ellis plays a key role in creating Chainlink’s technical architecture and the protocol’s ongoing iteration.

Another lesser-known name on the founding team is Ari Juels, a computer science professor at Cornell University. Juels, along with Nazarov and Ellis, wrote the original Chainlink whitepaper and continues to advise the Chainlink team. His research interests overlap with technologies that Chainlink has integrated, such as Town Crier and DECO.

The founding team’s core vision was to reliably connect smart contracts with the off-blockchain world after seeing the systemic risks posed by the traditional “words on paper” system. Sergey Nazarov, who called the 2008 financial crisis “a negative example of words on paper,” stated that Chainlink aims to solve such problems. The team believed in a future based on “cryptographic truth” and aimed to enable smart contracts to reach their full potential by connecting them to the real world.

Chainlink Labs is the company that works to turn this vision into reality and develop, spread and adopt the Chainlink network. The rapid growth of the project and its becoming an industry standard is a result of the vision of the founding team and the work carried out by Chainlink Labs. As Steve Ellis said, "smart people want to work on hard problems" and the Chainlink team achieved this by solving a fundamental problem such as connecting the blockchain to the outside world. In conclusion, Chainlink is the product of a vision led by Sergey Nazarov and Steve Ellis. The project has expanded the capabilities of smart contracts by closing the gap between the blockchain and the real world, allowing decentralized applications (DApps) to become much more complex and powerful. The LINK token is also an indispensable part of this ecosystem.

Frequently Asked Questions (FAQ)

You can find the most frequently asked questions and answers about Chainlink below:

• What is Chainlink and how does it work?: Chainlink is a decentralized oracle network that allows smart contracts on the blockchain to securely access external data. Data from different sources is verified by Chainlink nodes and transferred to the chain.
• What does LINK token do?: LINK token is required to pay node operators, ensure network security through staking, and use Chainlink services. It is the basis of the economic incentive system within the network.
• Why is the Chainlink oracle network important?: Because blockchains cannot access external data sources by nature. Chainlink enables smart contracts to interact with the real world by providing this data in a secure and decentralized manner.
• How does the staking system work?: Node operators stake LINK tokens to prove that they provide accurate and reliable data. If they act incorrectly or maliciously, the tokens they stake can be cut through “slashing”. This mechanism increases network security.
• Which networks is Chainlink used in?: Although it initially worked on Ethereum, it is now compatible with many blockchain networks such as Arbitrum, Polygon, BNB Chain, Avalanche, Optimism and Solana.
• What is CCIP and what does it do?: CCIP (Cross-Chain Interoperability Protocol) is the Chainlink protocol that enables secure data and token transfer between different blockchains. It aims to standardize inter-chain communication and connect Web3 and traditional financial systems.

Don't forget to check out our JR Kripto Guide series to closely follow projects that provide data security in Chainlink and Web3!