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SmartContractProcess.md

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ChainLink’s Smart Contract Process

  1. 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

  2. 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)

  3. 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  • Penalty payments may be withdrawn upon giving accepted answers to the aggregation contract

  • Payments for providing data to the user's smart contract may also be withdrawn after returning accepted answers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