Chainlink has released a new whitepaper exploring new capabilities of applications and smart contracts. Dubbed Chainlink 2.0, it lays down how the project could evolve to enhance blockchain oracles with the emergence of hybrid smart contracts.
Chainlink 2.0 is the next step in the evolution of decentralized oracle networks. In the initial conception, Chainlink found value as an oracle network, connecting blockchain networks to the real world. The need for oracles within blockchain has blown up especially with the rise of DeFi. This requires Chainlink to be fast, reliable, and secure to achieve off-chain computation for more advanced smart contracts.
Hybrid smart contracts are the natural next step in this decentralized revolution, Chainlink cofounder Sergey Nazarov believes. Speaking to ZDNet, Nazarov revealed that despite the rise of smart contracts, Ethereum gas fees have continued to be the biggest challenge. Chainlink has been solving this through off-chain reporting in which data is stored in a different decentralized network.
He commented, “Hybrid smart contracts are about combining blockchain smart contract application capabilities, and the off-chain world’s proof and data and computations. This is a big leap forward because it redefines what people can build.”
According to Nazarov, Chainlink aims to promote hybrid smart contacts after increased demand from developers for more advanced smart contracts. But this has also posed a few issues.
While on-chain computation offers privacy and security, it fails in scalability and high fees, especially on the Ethereum network. Off-chain computation on the other hand fails in privacy and security while promoting scale and lower fees. Nazarov believes that there will be a variation of this depending on developers’ preference.
Targeting DeFi and NFTs
Chainlink 2.0 will uniquely position the project to become a building block for the future of blockchain applications. The two areas Nazarov believes Chainlink could most impact are DeFi and NFTs, the two hottest sectors of crypto.
DeFi has continued to grow in the last year past the hype and now has over $57 billion in total value locked. Ethereum dominates this sector, with Compound, Maker, and Uniswap boasting billions of dollars in locked value. NFTs, on the other hand, has attracted the interest of the world’s leading brands and celebrities, from Paramount Studios to Jack Dorsey, Mark Cuban to Paris Hilton.
Before DeFi and NFTs, blockchain technology was just about tokens. Now, it powers a thriving financial system that’s threatening institutions that have existed for centuries. In the same way, Chainlink will lead a new revolution that will push the industry to the next level, the founder believes.
He remarked, “What’s going to define the new use cases is their ability to coordinate valuable outcomes across blockchains, and everywhere else. And that coordination is what hybrid smart contracts are really about.”
LINK Sets New Record
Prior to the launch of this whitepaper, Chainlink’s native token LINK hit an all-time high above $42 on Wednesday.
At press time, the coin is up 15% and trading above $43. The latest move has seen it climb back to the top ten ranked coins. On top of the new whitepaper release, the price was last week boosted by Graph Blockchain Inc. purchasing LINK worth $500,000.