ChainLink’s Smart Contract Process

Oracle Selection
- User creates requirements specification (SLA)
  - Query parameters
  - Number of oracles
  - Reputation
  - Penalty amount
  - Aggregating contracts
- User pays to fund the contract
- Submit SLA to Order-Matching contract
  - ChainLink nodes place bid
    - Nodes pay the penalty amount to bid
  - Contract accepts bids based on SLA requirements
- Nodes not chosen are refunded the penalty amount
Data Reporting
- Nodes connect to external data sources via their API endpoints
- Node processes received data through adapters
  - Data is parsed for the blockchain
- Node digitally signs its response
- Nodes send a hash of response plus a nonce (commitment)
Result Aggregation
- Nodes reveal results to oracle contract with their nonce
  - Oracle contract tallies results
  - Oracle contract calculates a weighted answer
- Validity of oracle responses are reported to the reputation contract
  - Responses are checked against their commitments from the Data Reporting phase
  - Responses that don't match their commitment are discarded
- Answer is returned to the user-created smart contract

Outside the process

Retrieving LINK

Penalty payments may be withdrawn upon giving accepted answers to the aggregation contract
Payments for providing data to the user's smart contract may also be withdrawn after returning accepted answers
Withdrawing penalty payments and normal payments for retriving data incur a transaction fee (gas) so it is not automatic
The smart contract creator may retrieve lost penalty payments by nodes reporting unacceptable data