# Web3 Infrastructure: Chainlink Part 1 By [captncrunch ](https://paragraph.com/@captncrunch) · 2022-10-25 --- Introduction ------------ This is the first part in a multi-post series meant to breakdown the various mechanics in web3 with the intent to simplify the complex connections between projects and the “how” of the protocols and services they provide. The information in this series will be broken down in parts to make it easy to consume. ### Overview Chainlink underlies the infrastructure of several prominent blockchain projects, underpinning over $6.4 trillion (as of October 12th, 2022) in value for well-known projects like AAVE, Synthetix, and Compound. But what exactly does Chainlink do? In summation: Chainlink provides “oracle services” that allow for reliable connections to “external APIs” and “off-contract computations” via “hybrid smart contracts”. Let’s first begin by breaking down this broad overview a bit further. Definitions ----------- ### Oracles Oracles are systems that provide real world data (such as a stock price) in a readable and usable format for blockchain smart contracts. For example, let’s say application A performs a certain activity when the temperature in Santa Monica, CA goes above 75 degrees Fahrenheit. The smart contract driving the application will contract an oracle to monitor the temperature in Santa Monica. When the temperature reaches above 75 degrees Fahrenheit, the oracle will notify the smart contract, which is then triggered to begin performing the activity. Chainlink make use of decentralized oracle networks (DONs) to perform activities. DONs are defined as “committees of oracle nodes that cooperate to fulfill a specific job or choose to establish a long-lived relationship in order to provide persistent services to clients”. Essentially, DONs are groups of oracles that work together to provide requested data and other services to Chainlink users. See the figure below for a visualization of how DONs operate. ![Details of DON configuration in the greater Chainlink ecosystem. Courtesy of Chainlink. ](https://storage.googleapis.com/papyrus_images/eac4571a90905605b5139150639589e3fe4a4f50d994f78bd3ecb7636347fd46.png) Details of DON configuration in the greater Chainlink ecosystem. Courtesy of Chainlink. ### External APIs Application Programming Interfaces (APIs) are intermediaries written in code that allow for two software components to communicate and share data with each other using an established set of definitions and protocols. Similarly to oracles, there are several types of APIs. In the context of oracles, APIs are used to search for and retrieve requested data from external sources(ie., websites) that the oracle can then relay to the smart contract. Using the Santa Monica example, the API would be the connection between the computer operating the oracle and the website that keeps real-time updates of the weather. It would take the updates from the website and then turn them into readable pieces of information for the oracle. ### Hybrid Smart Contracts & Off-Chain Computations Hybrid smart contracts are smart contracts whose code has been specifically formatted to allow for interactions with DONs. This modification is necessary as basic smart contracts are unable to perform complex computations. A good way to think of complex computations in this case are any coded activities that occur off chain, like keeping track of external events and data or creating a random number. Hybrid contracts allow for the seamless integration of Chainlink’s services with the smart contract goals. It’s important to note that while hybrid contracts are the primary method through which Chainlink operates their services, products like Chainlink Keepers are developing alternative methods that allow for a lite-version of their services to be utilized by smart contracts that have already been launched onto the blockchain without the hybrid contract code. Conclusion ---------- Now that we have clarified the overview of what Chainlink does, it is time to look at “how” they do it. The following parts will spotlight each of Chainlink’s products and provide an explanation of how they work. See you for the next installation. ### Sources _Chainlink 2.0 and the Future of Decentralized Oracle Networks | Chainlink_. [https://chain.link/whitepaper](https://chain.link/whitepaper). Accessed 24 Oct. 2022. _What Are Smart Contracts on Blockchain? | IBM_. [https://www.ibm.com/topics/smart-contracts](https://www.ibm.com/topics/smart-contracts). Accessed 24 Oct. 2022. _What Is an Application Programming Interface (API)?_ [https://www.ibm.com/cloud/learn/api](https://www.ibm.com/cloud/learn/api). Accessed 24 Oct. 2022. _What Is an Oracle in Blockchain? » Explained | Chainlink_. [https://chain.link/education/blockchain-oracles](https://chain.link/education/blockchain-oracles). Accessed 24 Oct. 2022. --- *Originally published on [captncrunch ](https://paragraph.com/@captncrunch/web3-infrastructure-chainlink-part-1)*