Solving The Oracle Problem [Sergey Nazarov]

<p>Listen to Software Engineering Daily: <a href="https://softwareengineeringdaily.com/2021/04/07/chainlink-connecting-smart-contracts-to-external-data-with-sergey-nazarov/">https://softwareengineeringdaily.com/2021/04/07/chainlink-connecting-smart-contracts-to-external-data-with-sergey-nazarov/</a></p><p><strong>Transcript</strong></p><p><strong>JM: Tell me a little bit more about the data sources for Chainlink. Like how do those<br>data sources get vetted and how does the data make its way onto the chain?</strong></p><p>SN: Right, absolutely. So there're actually two approaches here and I think they're<br>both important and the flexibility of how you acquire data is important. The first approach is that<br>you have an oracle network and that oracle network is a collection of nodes that are incentivized<br>just like blockchain miners and Bitcoin miners are incentivized. Those nodes are incentivized to<br>go out and get accurate data in order to generate the most accurate, highly reliable result<br>possible. </p><p>In the first version of how data is put into a smart contract, this oracle network of anywhere from<br>seven to over 30 nodes basically goes to an API at a data provider that is considered a highquality data provider. Often that's determined by users. So users will say, “Hey, we want that data provider.” Chainlink also has a reputation system where we track how well each node, and even more and more now how each data provider is performing. And so better data providers<br>get to continue selling their data to Chainlink networks, whereas worst data providers are kind of<br>not as used by node operators because they're either not responsive or not returning the right<br>results. And so there's actually a reputation system baked into Chainlink, and it's quite<br>fascinating because the system inherently puts all of the data on chain and generates a lot of<br>proof about what's going on with the oracles.</p><p>In any case, in the first variant of the system you can go to any data provider, you can