According to the World Economic Forum (WEF) blockchain-based smart contracts can help unlock the hidden value of legacy digital systems. To achieve this the legacy systems, need to become interoperable with the distributed ledger systems. According to the WEF academic paper, such a step would also need a Chainlink like infrastructure for decentralized data validation. This infrastructure will help validate the integrity of data inputs and will support tamperproof data exchange. Impressively, the WEF paper features Chainlink as a case study and this strengthens Chainlink’s stance in the space.
The paper “Bridging the Governance Gap: Interoperability for Blockchain and Legacy Systems” is co-authored by Sergey Nazarov, co-founder Chainlink, and Punit Shukla, the WEF blockchain project lead. It outlines an open-source framework that will act as a bridge between legacy digital systems and smart contracts. Additionally, the paper proposes standardization of crypto oracles and is using Chainlink as a case study.
We’re excited to share a new paper that we co-authored with @WEF, exploring the importance of decentralized oracles for connecting existing systems to blockchains and how #Chainlink provides a universal gateway for enterprises to easily adopt smart contracts.
— Chainlink – Official Channel (@chainlink) December 9, 2020
Chainlink for DeFi
The paper recommends that legacy systems that interoperate with DLTs must adopt a decentralized oracle network. Chainlink provides a major advantage here as it works across all major blockchains. Also, it provides high-quality oracles on which the enterprises can depend for reliable data. 2020 witnessed millions of dollars being hacked from DeFi protocols that rely on centralized price oracles. Thus, Chainlink like infrastructure is very important for systems interacting with DeFi protocols where billions of dollars flow in and out every day.
The paper also highlights a few services that the decentralized oracle network must provide. Interestingly, Chainlink is already providing some of those to the world’s leading enterprises for years now.
Furthermore, the paper also mentions MakerDAO as a case study, the protocol that uses oracles to fetch asset prices of supported collaterals.
PolkaDot, Cosmos for interoperability
Primarily, the WEF academic paper focuses on interoperability between non-blockchain systems and smart contracts. Thus, along with data validation, it is equally important to have interoperable blockchains in the ecosystem. To standardize the interoperability between blockchains, WEF is studying Polkadot and Cosmos.
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