Interview With ChainLinkGod - Decentralise #61

Oracles and the future of Chainlink

Interview With ChainLinkGod

Today I had the privilege of speaking with Chainlink community ambassador ChainLinkGod.

ChainLinkGod is one of the most informative users I follow on Twitter, so I was incredibly grateful to chat today.

We dived deep into his backstory, oracles, TWAP, off-chain reporting, the value of anonymity and memes, and the future of Chainlink.

ChainLinkGod went into incredible detail, and I want to thank him for giving up his time to share his insights with Decentralise.

Let’s get started.

Interview

1) Thanks for taking the time today ChainlinkGod. Your educational Twitter account has become a vital resource for the LINK community and wider ecosystem. How did you get involved with Chainlink, and what motivated you to step up and push the community forward?

“Hello! I am happy to share my thoughts and perspective with you and the community. My involvement with crypto has been an interesting journey thus far and where I have ended up today is quite different than I thought it would be. I got interested in the technology of crypto in 2017 when I learned about GPU mining trying to figure out why graphic card prices were double MSRP and how to make money come out of my computer like a money printer. After mining for a while, I stumbled down the crypto rabbit hole, first with Bitcoin, then Ethereum, and then an array of coins I can’t believe I ever touched (looking back on it now, hindsight is 2020 I suppose I jumped off those since).

I feel this is the path most people take, but in 2018, when researching how and why smart contracts couldn’t connect to the outside world and do real world type agreements, I eventually stumbled upon the little known category of blockchain oracles. I also found myself on 4chan’s /biz/ board where evidently the first post I found was a 17 page document describing Chainlink in-detail (as it were at the time) regarding what it was, how it will used, the names involved, further resources to look into, and it essentially answered many of the questions I had at the time regarding the future of smart contract development. I’m not sure if it was fate or just being in the right place at the right time, but I pretty much went all in and started obsessively following the project right then, which was a week before the https://chain.link website officially launched and conferences later that year when the team went from silent heads down working mode to getting ready for mainnet launch.

In 2019, I created my twitter account ChainLinkGod after reading the Crypto Oracle’s articles on medium (specifically this one) to talk with him and shitpost with the rest of the chainlink community. I really didn’t expect much out of it, but through my accumulated knowledge I found myself often teaching others on how Chainlink worked on a technical level and evolved into a mentor of sorts in the community. There wasn’t any specific moment in time where I decided this is what I was going to do, but as people latched on to my facts first approach, it was rewarding to educate others about the importance of secure blockchain oracles within the smart contract ecosystem. Since then I’ve started writing with the Crypto Oracle on the blog SmartContent where we continue on the path of education in a more shareable format. Knowledge is power.”


2) Chainlink provides an ecosystem of decentralised oracles, could you give an ELI5 of the oracle problem and how Chainlink solves this?

“Due to the strong security properties of the blockchain and its underlying consensus algorithm, smart contracts are unable to connect to off-chain data resources required for execution. Anything from a barrel of oil at closing time, the weather conditions in South Africa, who won the election in 2020, to what is the global price of Bitcoin at this very minute and beyond requires an external entity outside of the blockchain to deliver that data on-chain. That entity is known as an oracle and the data they deliver directly determine the actions and outcomes of a smart contract such as settling a bet on who won the world series. Before Chainlink, there were only centralized oracles that represented a single point of failure and largely defeated the purpose of using decentralized smart contracts in the first place.

Chainlink avoids this by taking a decentralized approach to this oracle problem by using a multiple of independent security reviewed oracle nodes for data delivery who themselves source from multiple premium authenticated data sources, preventing any single point of failure or single source of truth. Chainlink is a framework for building decentralized oracle networks that can consist of any nodes, data sources, or security parameters users desire. However, Chainlink also goes far beyond price feeds providing a wide range of oracle services including fair transaction ordering, verifiable randomness, data privacy, a blockchain abstraction layer for enterprises, and more. Ultimately, I think “Oracles” are too limiting of a term, because highly generalized oracles like Chainlink can perform more than just data delivery to include any arbitrary off-chain computations needed for smart contracts like data privacy, layer 2 validation, enterprise backends, and more.”

3) In recent weeks we’ve seen protocol’s not using Chainlink exploited for millions of dollars, why do you think so many are insistent on using their own oracles? Do you expect many more protocol’s to follow Aave’s lead and integrate Chainlink oracles?

“I think many projects don’t realize the monumental risks they are taking on when they use an oracle solution that lacks sufficient market coverage or worse, try to roll their own homebrew oracle implementation. Fetching price data from your favorite decentralized exchange is conceptually simple and easy to implement but opens the door to manipulation due to the lack of sufficient market coverage. When volume shifts across exchanges or a new untracked exchange appears, the oracle can begin delivering faulty data as the cost of manipulation lowers. Oracles are an incredibly nuanced technology and it's best to refer to the experts who have been working on oracles since before the launch of Ethereum.

Aave has been using Chainlink since day one of launch and it has allowed them to safely support billions of users of user deposited funds and allowed them their team to focus on creating new innovative features like credit delegation and flash loans (which ironically has been used to exploit other insecure oracles). Using Chainlink not only allowed them to speed up their go-to-market time significantly and expand to dozens of supported crypto assets, but also scale up in a secure manner as new secure price feeds that provide full market coverage can be rapidly launched. Chainlink has provided Aave with a secure and reliable source of market data even during the worst of times like Black Thursday, during the DeFi summer madness with extreme transaction fees, and during the Infura downtime event. We’ve seen many projects following this approach using Chainlink as their oracle solution and its why LINK has become the most widely used oracle solution in the space with hundreds of live or in-progress integrations across a wide range of smart contract use cases.”

4) Recently there was some debate with Uniswap’s Hayden Adams regarding their TWAP approach. Can you talk readers through that design, and how the weaknesses compared to Chainlink’s full market coverage?

“I covered my viewpoint on the Uniswap oracle in this thread here, but essentially it comes down to a few different points. It has been known for a long while that pulling the spot price from Uniswap is extremely dangerous and easily exploitable by flash loans. To combat this, Uniswap released a TWAP oracle with their v2 version, and while this solves the flash loan problem, it actually introduces a number of other issues that I don’t see discussed that often.

First, pulling price data from only a single exchange is an extremely dangerous oracle practice as it fundamentally does not provide market coverage. Because cryptos are permissionless to list on exchanges, volume shifts between exchanges happen very rapidly and quite often. This means while a uniswap market may be sufficiently liquid and present a decent percentage of the asset’s volume initially, it is not guaranteed to stay that way over time. This means the tamper-resistance of using Uniswap as an oracle can change quite significantly over time, and because developers are not data quality experts (nor should they be expected to be so), what was once an “okay enough oracle” may became a highly manipulable oracle down the line.

The bigger issue here though is down to what a TWAP is. The Time Weighted Average Price (TWAP) is a lagging indicator that is taken over a previous period of time. The longer the sample (e.g. 1 hour vs 1 day) the more resistant to tampering it is (more $$ needed to shift the price), but also the more stale the data becomes. This becomes a large issue during market volatility as the TWAP can become wildly out of sync with the market spot price of an asset. TWAP also has the unfortunate property of security being inversely correlated to accuracy. This means the only way as a developer to increase the tamper-resistance of a Uniswap TWAP (like when the value of the consuming contract rises), they are required to take a longer sample which results in more stale data.

This undesirable property is why most institutions do use the TWAP for calculating market prices, but instead take the Volume Weighted Average Price (VWAP)  which provides true market wide coverage. Additionally, with the increase in Miner Extractable Value, the Uniswap TWAP is not as tamper-resistant as some may assume given the ability for miners to arbitrary reorder and sandwich specific orders together to manipulate the snapshot. I really don’t see people discussing the trade-offs of the Uniswap TWAP very often, Hayden doesn’t seem too open to having the conversation. It’s unfortunate but at the end of the day it’s the users who are harmed when an insecure oracle gets attacked as has happened time and time again (now over $100M in user loses in the past couple months alone due to faulty oracle designs).

To prevent such issues, Chainlink price feeds do not use the TWAP, but instead take as weighted average as each node in an oracle network aggregates from multiple professional data aggregation firms who themselves fetch data from hundreds of exchanges and generate a weighted average reference price that takes into account volume, liquidity, and time differences across exchanges, while also accounting for fake volume and other forms of market manipulation. Chainlink is the long term price feed solution for DeFi, while Uniswap simply presents an optional stepping stone that should be replaced when a smart contract application increases in total value locked and the token becomes traded on more markets.” 

5) Let’s talk about frog war and LINK marines. Can you give your thoughts on how important anonymity is for our industry, and the power of the LINK army and meme culture.

“I think anonymity is an important tool that allows people to speak their mind without self-censoring what they say or needing to conform to social norms that restrict freedom of expression. However, anonymity is simply a tool and nothing more and it is up to the people to actually decide how they feel best to utilize such a tool. In crypto, anonymity is an increasingly important tool given the amount of money that is moving around and the need to maintain opsec and personal security.

Blockchains are inherently pseudo anonymous technology so I think it’s only natural that this property extends to the members in the community as well. It might seem weird to be conversing with cartoon characters, frogs, and anime avatars but you’ll often find those are some of the most knowledgeable people with the best insights on specific subjects. It’s not just outcasts either but these anon accounts include wall street executives, hedge fund managers, government employees, and other career people who utilize “alt” accounts with pseudonyms to get a ground level view of things without bringing unneeded attention to themselves or attaching their real world reputation to research and discussion.

In regards to the Chainlink community, a lot of the anonymity stems from its origins on 4chan and it's something that has really just stuck ever since. The same goes for the memes as well, which is another underappreciated tool in my opinion as memes are the most efficient form of p2p communication between disparate tribes/communities. The LINK memes provide a nice catch to pull people into the community where they can then learn about the project’s merits, but without memes they may not have ever deeply looked or heard about the project in the first place. I think the LINK community has the best memes in the space and while I might be biased, they are extremely effective and aren't something that’s going away anytime soon. So effective in fact that we see copycat communities show up that not only reformat our existing memes but also copy/paste specific pseudonym based community members as well (the Band community being the most infamous for this). I think imitation is the highest form of flattery and it really shows that we’re on the right path.” 

6) Off-chain reporting is almost here, what’s the significance?

“The significance of OCR is that the move from on-chain data aggregation to off-chain data aggregation will lower gas costs significantly and allow for more cost efficient and decentralized oracle networks, which is needed as the adoption of the Chainlink network continues to scale as the smart contract ecosystem itself grows in demand for off-chain data. This is a benefit not just for Ethereum but for all blockchains as many more Chainlink oracle networks are able to be launched to support a wider array of projects and use cases that were previously too expensive to pursue due to the gas costs.

As an example. The ETH/USD price feed is in the process of being upgraded from 21 oracle nodes to now 31 nodes. Even with the increase in node count, the costs are actually lower now, meaning integrating the price feed is cheaper for users enabling the network to continue scaling up in decentralization. Together with Chainlink’s growing network effect, these networks are able to provide the most cost efficient and secure oracle solution for projects of any size. OCR has been in the works for a while and will be rolling out in the coming weeks. OCR is also the first step towards threshold signatures (aggregation of oracle signatures) which will provide multiple orders of magnitude more gas cost savings which will be directly passed down to the users.”

7) What’s next for Chainlink?

“Chainlink continues to rapidly grow in adoption and this means expanding the team to include more academic geniuses like Ari Juels (previously Chief Scientist of RSA and created the term Proof of Work) and Ben Chan (former BitGo CTO and co-creator of Wrapped BTC), launching of more oracle use cases like Proof of Reserves and VRF, and increasing security through the addition of more nodes, data providers, and security measures like the staking of LINK and integration into additional blockchain environments through the grants program.

Chainlink always seems to have something up their sleeve so I imagine there is even more in the works that we don’t know about yet but I think the launching of Chainlink on layer 2 networks will be the most exciting development as it will allow for the creation of oracle networks that can update far more frequency due to the lower network costs and higher transaction bandwidth. Synthetic on Optimism, MCDEX on Arbitrum, dYdX on starkware, and beyond I think we will see the DeFi economy moving to layer 2 over the next year and this growth will be directly supported through more decentralized, faster, and secure Chainlink oracle networks. There is so much to be excited about in this regard. 

I want to thank you for giving me a forum to speak and answer some questions about myself, the frog, and the Chainlink network itself.

We’re are all in this together my frens.” 

Conclusion

Thank you ChainLinkGod for taking the time today. If you aren’t already make sure to follow his Twitter, he shares a wealth of information on Chainlink and the wider ecosystem.

If you’re interested in reading more you can also follow SmartContent, a publication from ChainLinkGod and The_Crypto_Oracle exploring Chainlink, smart contracts and the fourth industrial revolution.

There’s also a wealth of information on the Chainlink Youtube channel.

Join the Chainlink Discord.
Follow the official Twitter.


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