How Chainlink 2.0 Expands Reach for DeFi and Smart Contracts

Chainlink the Whitepaper for the second iteration. Chainlink 2.0 was 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 require oracles to feed them off-chain information. In the new iteration, Chainlink could continue, as the document claims:

We envision an increasing role for oracle networks, one in which they complement and enhance existing and new blockchains by providing fast, reliable and confidential 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 Chainlink Nodes Committee”, 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 continue to create a decentralized metalayer that enhances smart contracts with highly scalable, confidential and secure forms of off-chain computation in addition to the external data Chainlink already provides today.

With the above capabilities, Chainlink’s developer team will focus on 7 core areas as detailed in the document: hybrid smart contracts, scalability, confidentiality, minimization of trust, incentive-based security, less complexity and fairness of transaction orders.

Focusing on the goal of extending Oracle services beyond data delivery in a current environment with growing demand for oracles, Chainlink 2.0 will enhance its network to:

(…) Minimize strong confidence through a combination of principled cryptoeconomic mechanisms such as stakeout and carefully designed crash barriers and service-level enforcement based on trusting backbone chains.

The new system will be more flexible, according to the whitepaper, more cost-effective for transactions in terms of gas with a new policy for their “fair order”. The main vision in the document appears to be aiming for a ‘new architecture’ that goes beyond blockchain technology, with DONs at the center:

The flexibility of DONs will enhance existing Chainlink services and give rise to many additional smart contract features and applications. These include seamless connection to a wide variety of off-chain systems, decentralized identity creation from existing data, priority channels to ensure timely delivery of infrastructure-critical transactions, and confidentiality of DeFi instruments.

Chainlink 2.0, already a strong competitor in DeFi, seems to be holding on to a commotion with a ripple effect felt in the DeFi sector and to the benefit of the users.

At the time of writing, LINK is trading at $ 42.84 with a gain of 9.2% on the 24 chart. In the weekly and monthly chart, LINK has 37% and 56% profit respectively.

Chainlink LINK
LINK in upward momentum on the 24-hour chart. Source: LINKUSDT Tradingview

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