Will Nazarov's Vision be Correct & How Does Chainlink Solve the Oracle Problem
Chainlink has been an important project in Ethereum's DeFi (decentralized finance) ecosystem and the blockchain space in general since its release. It was the first project to grapple the "oracle problem" that blockchains struggle with. Chainlink provides a decentralized oracle service that inputs data from external sources like the internet, to the blockchain.
Yesterday the second day of an Ethereum conference in Denver, Colorado aptly named ETHDenver took place. The event had over 2000 participants from over 30 countries and 62 international sponsors. Many big names in the world of blockchain and Ethereum specifically were in attendance. This included Vitalik Buterin & Joseph Lubin, Ethereum's founders, Erik Voorhees, the founder of ShapeShift and Sergey Nazarov Chainlink's CEO.
Chainlink, Oracles and Ethereum
Sergey Nazarov, Chainlink's CEO was one of the more notable speakers ETHDenver. He took to the stage and delivered a 12-minute speech on Chainlink, the oracle problem and the future of blockchains like Ethereum.
One of the interesting parts of Nazarov's speech was the way he envisioned DeFi and tokenization. He noted that tokenization is common in Ethereum and other blockchains because they are easy to build. He stated that developers can redefine the space by looking beyond tokenization.
"The reason our space is so heavily focused in and defined really by tokens is because that's what you can build today. If you can go beyond building tokens, then the space can become entirely redefined. Because if you look at the digital agreements out in the world, they're not about the majority of them aren't about ownership."
Nazarov later added that while tokenization can be useful, the blockchain space is becoming defined by tokenization. Additionally, he stated that tokenization has limited use-cases and that DeFi will eventually have more complex smart contracts. This will be the moment that blockchain technology will truly grow.
"The majority of them are about other, more useful economic activity. So, as I said, our space is basically defined by tokens and those tokens are very good. This is a limitation that events like this can help overcome. Personally, I think what's going to happen is very clear. You're going to see a shift from: "I'm generating tokens, I'm generating more tokens, I'm generating more tokens year after year," to: "I'm building decentralized financial products." And those decentralized financial products begin to redefine how financial products should work. And DeFi is really the beginning of this trend towards using blockchain infrastructure, not just for tokens, but for digital contracts that do something other than ownership and transfer of ownership right now."
Nazarov on Blockchain Insurance
Later in his speech, Nazarov brought up an example price reference data in regards to gold, and then brought up oracles for blockchain based insurance. He stated that blockchain technology could greatly improve the industry with the usage of oracles.
"Another example is insurance markets. You can get insurance data from something like, from one node or from multiple nodes. And once again, pay correctly to the right markets. And once again, we provide an infrastructure where you could get all this weather insurance data, generate all these payments in something that takes hours instead of days or weeks. So this is once again, is a significant improvement."
Nazarov later finished his speech by saying that he believed that he believes that blockchain technology will benefit the average person. This will happen when smart contracts & blockchains become the dominant form of digital agreement that will power the financial industry.
"I personally believe are going to redefine the space once again by building the use-cases which truly, come to take us from blockchains or about those token things to blockchains are the dominant form of digital agreement that powers the global financial industry, the global trade finance industry, the global insurance industry in a way that trickles down and benefits the average person in ways that I unfortunately do not have enough time to explain."
Perhaps we will see the day that blockchain technology partners with or overtakes traditional finance. It might become a reality with the help of oracles and more complex smart contracts.
Written by Jonathan Ganor
Writer & cryptocurrency aficionado