What are the challenges in integrating off-chain data into blockchain smart contracts with oracle systems, and how might secure, oracle-powered DeFi create meaningful social impact?
In this episode, Joe Petrowski (Research Analyst, Parity) talks with Sergey Nazarov from Chainlink, a decentralized oracle system bringing external, real-world data to blockchain-based smart contracts. Oracle systems like Chainlink are a necessary part of decentralized finance (DeFi), for which off-chain data such as market prices are used to trigger smart contract functions. We discuss the inherent challenges in integrating off-chain data with end-to-end security guarantees, the barriers to building smart contracts that go beyond tokenization, Chainlink use cases, the promise of blockchain for social impact, and how Chainlink is planning a Polkadot integration.
01:04 - Chainlink overview
07:20 - Oracle weakest link problem
14:45 - Chainlink use cases
17:40 - How to trust off-chain data
22:53 - Social promise of blockchain
41:00 - Chainlink Polkadot integration
“The thing to remember is, what you’re doing when you’re making DeFi products or smart contract insurance is yes, you’re making a smart contract because you’re using on-chain logic, but you’re also expanding what you define a smart contract as. And that expansion into this off-chain realm of data delivery or randomness, for fraud-proof gaming or any other set of off-chain resources, needs to be equally secure if you expect that contract to hold large amounts of value.”
“The guarantees that society provides around ownership, when compared with Bitcoin guarantees, are laughably weak.”