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Off-chain computation via Chainlink Oracles provides radical smart contract developments

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  • Chainlink, the firm behind the revolutionary Oracle technology, has released a new paper outlining prospects.
  • A particular highlight is off-chain computing, allowing developers greater flexibility and reduced costs.
  • Chainlink, however, will not become a blockchain in itself, says founder Sergey Nazarov.

The introduction of blockchains may have revolutionized FinTech firms and economic systems worldwide. However, their inherent properties that make them secure and tamper-proof may also be the reason for allowing very little flexibility. To overcome that impediment, Chainlink Oracles come into the picture where a network of nodes provides real-time, tamper-proof data to the chain. This has immense potential as assets and their price fluctuations could be tracked continuously.

Chainlink 2.0 – a radical proposition

Smart contract developers are hard-pressed to write highly efficient code to minimize computational complexity on the chain, primarily Ethereum, thereby reducing transaction/gas costs. This puts a virtual limit on the capabilities of such a smart contract. However, a new white paper introduced by Chainlink proposes the shifting of computation to off-chain Oracle nodes while using the blockchain only to maintain the state of affairs in what is being termed as hybrid smart contracts. This radical proposition, termed Chainlink 2.0, would significantly improve computational prowess while reducing costs.

Developer’s impediments

However, this project is not without its limitations, as accountability and privacy are significantly in question when computation is carried out off-chain. Moreover, the line between the Oracle network and an actual blockchain becomes increasingly blurry. Nazarov also opined that though on-chain computation is possible, developers will increasingly require decentralized services to maintain the state of smart contracts. He also stated that Oracles are designed only to augment the smart contract, which would essentially be run on-chain.

Developers will be perplexed as to which computation is to be carried out on-chain and which ones to be carried out off-chain. The answer to this riddle lies within the contract itself. The developers will have to mix the suitability and security of on-chain computations with the flexibility and scalability of off-chain ones. The core idea is to ensure that trust issues between parties are resolved via cryptographic systems rather than intermediaries.

The development of hybrid contracts using Chainlink’s Oracle networks holds great promise in the context of current issues with Ethereum based smart contracts.

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