Smart contracts are applications that execute on decentralized infrastructure, such as a blockchain. They are tamperproof, in the sense that no party (even their cre- ator) can alter their code or interfere with their execution. Historically, contracts embodied in code have run in a centralized manner that leaves them subject to al- teration, termination, and even deletion by a privileged party. In contrast, smart contracts’ execution guarantees, which bind all parties to an agreement as written, create a new and powerful type of trust relationship that does not rely on trust in any one party. Because they are self-verifying and self-executing smart contracts thus offer a superior vehicle for realizing and administering digital agreements.
The powerful new trust model that smart contracts embody, though, introduces a new technical challenge: connectivity. The vast majority of interesting smart contract applications rely on data about the real world that comes from key resources, specifically data feeds and APIs, that are external to the blockchain. Because of the mechanics of the consensus mechanisms underpinning blockchains, a blockchain cannot directly fetch such critical data.
CoinMaya.io propose a solution to the smart contract connectivity problem with ChainLink, a secure oracle network. What differentiates ChainLink from other oracle solutions is its ability to operate as a fully decentralized network. This decentralized approach limits the trust in any single party, enabling the tamperproof quality valued in smart contracts to be extended to the end-to-end operation between smart contracts and the APIs they rely on. Making smart contracts externally aware, meaning capable of interacting with off-chain resources, is necessary if they are going to replace the digital agreements in use today.
Today, the lion’s share of traditional contractual agreements that have been digi- tally automated use external data to prove contractual performance, and require data outputs to be pushed to external systems. When smart contracts replace these older contractual mechanisms, they will require high-assurance versions of the same types of data inputs and outputs. Examples of potential next-generation smart contracts and their data requirements include:
• Securities smart contracts such as bonds, interest rate derivatives, and many others will require access to APIs reporting market prices and market reference data, e.g. interest rates.
The main use of smart contracts in Ethereum today is management of tokens, which are a common functionality in most smart contract networks. We believe that the current focus on tokens to the exclusion of many other possible applications is due to a lack of adequate oracle services, a situation CoinMaya.io specifically aims to remedy.