Chainlink Off-Chain Reporting (OCR) Goes Live: Boosts Efficiency of Network

The popular oracle network Chainlink announced the launch of Chainlink Off-Chain Reporting (OCR) on February 24th, which is a highly anticipated upgrade that has been months in the making.

Chainlink claims that OCR will not only significantly improve the efficiency of the network’s data computing but it will also reduce costs by up to 90% to enable users to save in gas fees and boost adoption.

Gas costs have been the bane of Decentralized Finance (DeFi) platforms since 2020 due to high Ethereum gas prices and the difficulties that migrating to another network would imply.

The upgrade in Chainlink’s mainnet is expected to help alleviate these costs to some extent and improve the status of the DeFi niche. These costs have become prohibitive for many applications, and remove the utility of the platform for low-value applications.

According to the announcement, users will see a 10 times increase in the data that can be handled by smart contracts, which should allow new applications to emerge as new datasets become available.

The OCR update will also further decentralize the oracle network, increase the frequency of on-chain updates, improve the cost-efficiency of onboarding new nodes, reduce congestion on the chain, and reduce oracle latency.

The Future of Chainlink

Before this update, a great part of the computations realized by chainlink was taking place on-chain, which resulted in less scalability, lower efficiency, and higher computational resources being needed.

With this update, chainlink is transitioning toward an off-chain computation model in which the network will be able to function in situations where conditions are not optimal, creating a more scalable ecosystem.

Sergey Nazarov, Chainlink’s founder, said in an interview with media that the development team will be working on verifiable randomness, keeper functions, and fair sequencing, all of them with applications on the DeFi and gambling niches.

Verifiable randomness has been worked on by chainlink for over a year with iterations of it already being available.

Known as chainlink VRF, this feature allows smart contracts to increase their resilience against bad actors by creating unpredictable but verifiable cryptographic proofs that allow the network to remove malign nodes.

New Functions for Better Performance

Keeper functions and pair sequencing improve the stability of the network by improving coordination between nodes and standardizing computational procedures.

As oracle networks are all about handling and serving data requests, improving the datasets that a smart contract can handle and ensuring its availability is essential o preserve the functionality of the network, benefiting all the parties involved.

Chainlink’s token, LINK, has recently seen its price reach an all-time high of $36.95 back on February 20th, more than twice the value that saw the project made headlines in August of 2020 as it became one of the most widely known projects in the crypto sphere.

Chainlink Virtual Hackathon: Accelerating Innovation in the Smart Contract Ecosystem

Chainlink has also recently announced that it has partnered with AAVE, Consensys, Polkador, Synthetic, and other companies to run a virtual hackathon from March 15th to April 11th.

The hackathon will see developers from across the globe collaborate with each other, hear from experts in the industry, and learn about new projects. The event will also have an $80k prize pool to be distributed as bounties in categories like DeFi and Gaming.

Chainlink Co-founder Sergey Nazarov, Avalanche Founder Emin Gün Sirer, and Aave Co-founder Stani Kulechov are some of the biggest personalities that will be participating in the event.

Historically, Hackathons have been a major source of innovation in the tech industry by allowing experts of all areas to join their efforts in developing new applications for different technologies, with the best project usually receiving direct support from the organizing companies.



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Chainlink rolls out OCR system upgrade, reducing gas costs tenfold

Chainlink (LINK) has launched a major upgrade for its oracle network, dubbed Off-Chain Reporting, or OCR. The upgrade was announced on Wednesday, though the implementation has been live for some time already.

OCR changes how data across multiple sources is joined together by the oracle network. Previously, the process of aggregating different readings of the same desired input, for example a token’s price, was done on-chain. Chainlink nodes would submit their individual readings of the data, which would be verified by a smart contract on Ethereum and other blockchains. This approach, while guaranteeing reliability of the data, was inefficient in terms of gas costs, as each node would need to spend resources to publish the data.

The new architecture replaces on-chain aggregation with an off-chain consensus round. The aggregated data is then passed on to the blockchain, where a smart contract verifies that a quorum of nodes agreed on this version of the data.

Sergey Nazarov, founder of Chainlink, told Cointelegraph that the team has been working on the protocol since 2017. “We’ve started to put the best minds behind [it] over the last year and a half and have done substantial multiple audits on it,” he added.

The most immediate effect of the upgrade is reduced gas costs and load on the Ethereum network. According to the team, the upgrade will result in a tenfold increase in the amount of real-world data that could be available on the blockchain. As Nazarov explained, this increase is “partially related” to the gas limitations of the Ethereum blockchain:

“I think the nuance here is that we want to do this in a scalable way, basically, and we want to do it in a scalable way that works for Ethereum and various other chains. What this means is that, in times of congestion, the system should be able to continue to deliver these amounts of data because when you architect a system like this, you don’t architect for the best case.”

Chainlink nodes thus could have chosen to publish more data with the previous system, though the gas costs would have made that significantly difficult. “Our system needs to be able to function even in extreme situations, which so far it has been, better than all other oracles,” continued Nazarov. “So that’s the standard we need to meet. And if we suddenly increase 10x the amount of data on the current system — yeah, it could work in some good conditions and it would be costly, and it would actually raise everybody’s costs, which is not something we believe in.”

But beyond the immediate effects, Nazarov believes that this upgrade will have more important effects in the future. “Really what you’re seeing here now is the Chainlink network growing into something that is going to do more and more off-chain computation.”

While that does not mean Chainlink will transition to building rollups and layer two solutions, Nazarov said there are three distinct services that the Chainlink network will soon provide. This includes verifiable randomness, a feature that has already been launched and that allows DApps to have a trusted source of random numbers, which could be particularly useful for gambling platforms and prediction markets. The other services, enabled by OCR, include keeper functions and fair sequencing, both solutions to very practical problems affecting DeFi.

Keepers are a type of maintainers necessary in smart contract environments. For example, some contracts require conducting periodic actions, which are normally triggered by the team or someone in the community — formalizing this behavior is what projects like Keep3r or are trying to do.

Fair sequencing is a proposed service that aims to fix front-running and miner extractable value in DeFi. The issue arises when a blockchain operator can freely rearrange transactions to theirs or someone else’s benefit. For example, when they see a multi-million swap about to be confirmed on Uniswap, they can quickly place their transaction to benefit from a better price.

The OCR system enables more freedom in how computations are performed on the Chainlink network, enabling new kinds of services centered around computing data instead of publishing it. Nazarov said that these ideas come from very practical needs that are unaddressed in the current market. “We generally do not want to build the pieces of the stack that we do not have to build,” he said. “We want to be the maximally positive-enabling force for smart contracts, closing all the gaps in the stack that aren’t closed.”