Erik Weijers, 2 months ago
Long time since we discussed Chainlink! With Chainlink Functions, we have a great excuse. It is a new product that will connect decentralized applications to those of Web2 (the good old internet). Smartcontracts can link to any API, fetch data, and execute based on these data. For example: the automatic payout of musicians based on the stream data of their songs.
Chainlink Functions is now in closed beta and is live on Ethereum and Polygon testnets.
A quick refresh: Chainlink uses a network of data providers called oracles, which work as software versions of middlemen between smart contracts and data, facilitating two-way data transfers. In the Decentralized Finance boom that started in 2020, Chainlink was started to be used for the exchange of price data between different apps.
While most people know Chainlink for providing price feeds, it has many - and arguably more important - use cases beyond reliable financial data. Let's have a look at a few examples of Chainlink Functions connecting various sorts of data to smart contracts.
Chainlink Functions could for example streamline NFT giveaways by a company. Chainlink Functions would automate the process of identifying winners and minting NFTs for their wallet addresses.
Chainlink Functions could be used to bridge the gap between a smart contract and music stream data. Arecord label and a music artist could use a smart contract to define the terms of their contract. Chainlink Functions would connect to a music data API and calculates the payment amount. It then uses Twilio to send an email alert to the artist about their streams and payment amount. Also, the contract can send the payment in for example USDC.
Google Analytics and BigQuery could be integrated with decentralized applications (dApps). This would allowlive updates on-chain about website statistics. Let's say a user can vote on some poll on a website. Their pick is sent to Google Analytics and then stored in Google BigQuery, a tool for analyzing large datasets. Chainlink then retrieves the vote counts from BigQuery and updates the smart contract with the vote totals. Once the voting period is over, the smart contract processes the vote counts and determines the winner.
Chainlink Functions can be used for decentralized insurance based on weather data. It aggregates data from multiple sources, ensuring a consensus on the final result before updating the smart contract. Let's say an insurance contract will pay out if the rainfall in Amsterdam exceeds 30 mm for three consecutive days. Chainlink Functions passes these data to the smart contract, which determines the client should be paid out.
Venturing beyond DeFi, Chainlink Functions opens up a realm of possibilities for using smart contracts in applications, including the creator industry and the insurance market. It will be interesting to see if the LINKtoken can benefit from these upcoming developments.
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