Aelf will be one of the few blockchains that will have the ability to not only communicate but also rely on verifiable data from other blockchains and data sources through trustworthy and immutable data oracles.

By connecting with Chainlink Oracles, the aelf blockchain will have access to data sources such as NASDAQ, Google Cloud, Oracle, and SAP, as well as blockchains such as Bitcoin and Ethereum. The oracles will verify data, ensuring that it is both trustworthy and accurate before it is submitted onto the aelf blockchain. This, in turn, drastically increases the accuracy and security of any smart contracts running on the ecosystem.

In addition, by providing such reliable data outside of the aelf ecosystem, the application of implementing blockchain as a solution becomes a realistic option for many enterprises who were previously apprehensive about implementing similar solutions.

Why is this Unique

Blockchains inherently lack the ability to connect to other data sources or blockchains on their own. This results in a very limited data set available to smart contracts who are trying to execute based on specific results or situations.

In order to alleviate this core issue, the development of connectors that are attached to blockchains to allow the input of data from other sources have resulted in numerous options being available in the form of an oracle. These oracles are a centralized 3rd party who receive the data request from the smart contract, conduct the search and compile the relevant results. This requires a large degree of trust to be put in these oracles, in a sense, defeating the purpose of a public decentralized blockchain. The oracles become the weakest link in the blockchain and open to manipulation or tampering which could result in smart contracts executing an incorrect action as a response to the inaccurate data.

There are very few options available to blockchains that provide real time data in a trustworthy and verifiable manner.

What are Smart Contracts

A smart contract is a deterministic, tamper-proof and reliable digital agreement run on a decentralized blockchain infrastructure.

Smart contracts have an edge over standard, everyday contracts for two reasons.

First, smart contracts are trusted, shared records. They are so secure that individual parties do not need to keep their own backup copies, a boon for modern companies where multiple departments have conflicting workflows due to the lack of a single record of truth.

Second, smart contracts are highly deterministic. In traditional scenarios, contracts may not be executed on as agreed upon out of error or reluctance. Smart contracts run in environments where they are executed exactly as written and do not require approval at each step. If pre-established conditions are fulfilled, key parameters execute automatically.

What are Oracles

As mentioned above, oracles are essentially a portal that connects a blockchain to external data sources, market feeds, or web APIs. Data feeds in real-world markets and web APIs are usually not deterministic like blockchains and smart contracts. Oracles act as a bridge that can digest external and non-deterministic information into a format that a blockchain can understand and execute particular conditions with.

There are several forms of Oracles including:

Hardware Oracles

Software Oracles

Consensus Oracles

Inbound Oracles

Outbound Oracles

Hardware Oracles are sensors integrated with tangible physical objects. Primary examples would be in supply chain tracking with the use of RFID tags for feeding data like environmental conditions of products to the blockchain.

Software Oracles are the most common form that pull data from third-party sources such as web APIs and can include real-world information like flight statuses and weather data.

Consensus Oracles represent a step towards decentralized oracles and rely on aggregating data from several oracles with proprietary methods for determining their authenticity and accuracy.

Inbound Oracles reflect “if this happens then do that” scenarios associated with software oracles such as “if this price is met by an asset, then trigger a sell.”

Outbound Oracles allow smart contracts to send data to sources outside of the blockchain network they exist on and are also software oracles.

The Chainlink Solution

Chainlink have developed a decentralized oracle network which identifies and verifies data accuracy prior to it being included in a blockchain that triggers a smart contract. The Chainlink blockchain is consists of oracle nodes who respond to individual data requests made by smart contracts. There are 3 components to the blockchain system:

Reputation Contract

Order-Matching Contract

Aggregating Contract

The Reputation Contract uses a proprietary method for storing and tracking oracle service provider metrics.

The Order-Matching Contract takes a service level agreement (SLA) and logs the data parameters of the SLA while simultaneously taking bids from oracle providers.

The Aggregating Contract collects oracle provider’s responses and calculates the final collective result of the initial ChainLink query.

Essentially a smart contract will make a data request in the form of an SLA through Chainlink and this will be broadcast to each of the oracle nodes. Oracle nodes will source the data and submit a bid to complete the data request. All this is managed by the Order-Matching Contract, the submitted data will then be collated for accuracy through the Aggregating Contract by comparing multiple responses from different nodes.

The relevant information that results from each completed SLA will be fed back into the Reputation Contract resulting in an adjustment to each node’s reputation, which affects the incentive received.

The SLA is a core component to this system as it allows for users to set explicit parameters and inputs for the requested data sets, including the reputation of oracles or how many oracles are to be included.

The transition from off-chain data to on-chain data is completed by each oracle as they source the information off-chain, and submit it on-chain for verification. Oracles who have their data used to complete a data request are provided with Chainlink tokens called Links, weighted by their reputation

Currently, Chainlink has oracles pulling data from Blockchains such as Bitcoin, Ethereum, and Hyperledger, as well as other data sources such as NASDAQ, Google Cloud, Oracle, SAP, and multiple banks. In addition, by connecting with aelf, not only can data from any of these sources trigger smart contracts on the aelf blockchain, but data on the aelf blockchain can now be used to trigger events in other platforms including blockchains like Ethereum or Hyperledger.

Does Communication mean Interoperability?

One of the features that many blockchains have been seeking to develop is cross-chain interoperability. When discussing communication, this can easily be misinterpreted as blockchain interoperability, but in reality, they are not the same thing. Yes Interoperability requires communication between blockchains, but it also requires more than that. The aelf blockchain, is developing a complete solution which will feature proper blockchain interoperability, and this will work hand in hand with Chainlink’s oracle network. One does not replace the other, but they work synonymously to compliment each other.