Last month, at the ETHGlobal Pragma London summit, which was aimed at Web3 builders and leaders, Chainlink co-founder Sergey Nazarov and ETHGlobal co-founder Kartik Talwar discussed the evolution of Chainlink’s decentralized oracle services, how they enable new use cases for smart contracts, and how they are paving the way for innovative changes in the world.
Sergey stated that Chainlink originated from the need for consensus that blockchain couldn’t handle. Starting with market data that gave birth to DeFi, Chainlink continues to provide novel cryptographic validation information on-chain, powering more advanced smart contracts.
As Sergey put it, Chainlink essentially brings “smartness” into smart contracts.
“When we realized that smart contracts were not interconnected, we tried to fill this huge gap,” he said. “Price data was the first point of convergence for this gap with real demand, but the scale of the entire system goes far beyond this.”
Chainlink has secured over $10 trillion worth of on-chain transaction value and has provided a growing set of decentralized microservices, which are crucial for building Web3.
For example, Proof-of-Reserves (PoR) cryptographically verifies the state of events or assets in external systems, enabling transaction counterparts to better manage risks. “Proof-of-Reserves is actually the beginning of ‘proof of everything,’ where you want to prove something to your transaction counterpart so that they can transact with you,” explained Sergey.
PoR is just the beginning. “I started to view Chainlink as a set of off-chain systems that create trust-minimized injections of trust-minimized data, trust-minimized identity, trust-minimized payment capability/proof-of-reserve into on-chain transactions, making these on-chain transactions emerge and become practical,” he said.
Next, Chainlink addressed the question of how to bring various computations and automation capabilities on-chain through Automation, VRF (Verifiable Random Function), and Functions, such as telling smart contracts the current time.
Then, Chainlink subsequently applied its time-tested decentralized oracle network security model to build the Cross-Chain Interoperability Protocol (CCIP), which is a global standard for moving data and value across different blockchains.
“Chainlink’s goal is to become a system that brings everything into blockchain, off-chain, and between blockchains,” said Sergey.
CCIP represents a turning point for Web3, allowing traditional financial institutions to tokenize real-world assets that can freely flow within the entire blockchain economy. As demonstrated by the concept proof of Swift, CCIP aims to merge DeFi and TradFi into a global contract internet.
“We’re about to launch a lot of features,” Sergey said. “These features are partly related to Web3, partly related to capital markets and enterprises. CCIP is trying to connect these two worlds.”
He envisions a future with multiple chains, where every bank, asset management company, and enterprise creates their private chains to transact with public blockchains like Ethereum. “This is very favorable for expanding the crypto community,” he said. “The entire crypto space is driven by net new users.”
Ultimately, he believes that when the user experience reaches the same level as Web2, the world will shift to Web3. “The user experience of Web3 should be as good, as simple, and as fast as Web2, while not being complex,” he said. “People are like water; they will choose the path of least resistance.”
Where Web3 surpasses Web2 is in its exceptional transparency and cryptographic guarantees, where assets cannot be stolen and the rules of applications cannot be arbitrarily changed. Sergey believes that once this pattern becomes easy for ordinary users to adopt, it will change the entire world.
“It’s not about a specific use case,” he said. “It’s about all the data in the world, all the ownership in the world, and all the transactions in the world that operate in this way.”
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Chainlink oracles
WEB3
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