How Chainlink 2.0 Will Expand The Reach for DeFi and Smart Contracts
Chainlink the Whitepaper for its second iteration. Chainlink 2.0 has been created to allegedly take the “next steps in the evolution of decentralized oracle networks”.
With one of the most used applications in DeFi, these protocols need oracles to feed them with off-chain information. In the new iteration, Chainlink could go beyond, as the document claims:
We foresee an increasingly expansive role for oracle networks, one in which they complement and enhance existing and new blockchains by providing fast, reliable, and confidentiality-preserving universal connectivity and off-chain computation for smart contracts.
Chainlink 2.0 will be based on a concept called Decentralized Oracle Networks (DON). Maintained by “a committee of Chainlink nodes”, the platform will be able to support an “unlimited” number of functions.
What are Chainlink’s hybrid smart contracts?
The DON will be a layer to deploy smart contract interfaces with the capacity to support off-chain computing resources without the intervention of a third party. The Whitepaper says:
Decentralized Oracle Networks can go on to create a decentralized metalayer that enhance smart contracts with highly scalable, confidential, and secure forms of off-chain computation, in addition to the external data that Chainlink already provides today.
With the above capacities, Chainlink’s team of developers will focus on 7 core areas, as described by the document: Hybrid smart contracts, scaling, confidentiality, trust-minimization, incentive-based security, less complexity, and order fairness for transactions.
Focus on the goal of expanding oracle services beyond a data provider in a current environment with growing demand for oracles, Chainlink 2.0 will enhance its network to:
(…)offer strong trust minimization through a combination of principled cryptoeconomic mechanisms such as staking and carefully conceived guard rails and service-level enforcement on relying main chains.
The new system will be more flexible, per the Whitepaper, cost-efficient for transactions in terms of gas with a new policy for their “fair ordering”. The outline vision in the document seems to aim towards a “new architecture” beyond blockchain technology with DONs taking the center stage:
The flexibility of DONs will enhance existing Chainlink services and give rise to many additional smart contract features and applications. Among these is a seamless connection to a wide variety of off-chain systems, decentralized identity creation from existing data, priority channels to help ensure timely delivery of infrastructure-critical transactions, and confidentiality-preserving DeFi instruments.
Already a strong competitor in DeFi, Chainlink 2.0 seems pegged to cause a commotion with a ripple effect felt across the DeFi sector and for the benefit of the users.
At the time of writing, LINK is trading at $42,84 with a 9.2% profit in the 24-chart. In the weekly and monthly chart, LINK has 37% and 56% gains respectively.