Chainlink (LINK) Launches Off-Chain Reporting Feature to Improve Network Scalability
Chainlink has taken a step forward in the development as it launches of-chain reporting for its oracles. The blockchain continues to be the most viable alternative for Ethereum, which keeps dealing with rising gas fees.
Blockchain protocol Chainlink continues to blaze the trail in the industry with the addition of another nifty feature for its users.
The oracle network has announced the launch of off-chain reporting (OCR), an upgrade to its oracle network that improves data aggregation.
OCR Brings Good Tidings for Chainlink
Oracles are a significant part of the entire blockchain ecosystem. Thanks to their operation, blockchains can receive price details and other information that are only available from external sources.
Ideally, oracles would have to aggregate different readings of the same information (such as price) on-chain after getting it from their sources. Nodes will submit their readings for the data, which will then be verified by smart contracts on Ethereum and other blockchains.
Although the method helped guarantee data efficiency, it was also costly. Nodes were required to publish data on-chain, incurring significant gas fees. With gas fees on the Ethereum blockchain especially surging over the past few months, the method is unreliable.
In its latest development, Chainlink will allow oracles to aggregate their data off-chain. Then, aggregated data is published to the blockchain, where smart contracts verify it.
The Chainlink team explained that this new structure would reduce both gas fees and congestion on the Ethereum blockchain. The Chainlink Network has been scaling up the amount of data provided on-chain through Proofs of Reserve, Price Feeds, and more.
With the scalability improvements brought by OCR, the network can improve this trend and provide developers with greater access to a broader external data pool. Thus, information use and access across the network can improve significantly.
Beyond scalability improvements, the OCR update also provides benefits like greater oracle decentralization, reduced network congestion, and cost-efficient node onboarding.
Rising Problems with Ethereum
Chainlink’s new OCR protocol should improve its standing as a top Ethereum contender, with the decentralized finance (DeFi) industry especially looking for a substitute for the latter. Rising gas fees and scalability issues have plagued Ethereum over the past year as transactions on the blockchain have ballooned.
This week, Messari published data showing that the Ethereum blockchain already settled $926 billion in transactions this quarter – a 700 percent jump from the settlement figures shown this time last year. The network is on pace to hit $1.6 trillion in transaction settlement this quarter. For reference, the blockchains settled $2.1 trillion over the entirety of 2020.
If Messari’s forecast holds, Ethereum’s quarterly settlement value will surge by 1,280 percent compared to Q1 2020 and over 5,000 percent over Q1 2019. The blockchain’s rise has been fueled by the DeFi and non-fungible tokens (NFTs) sector, mainly leading to hikes in gas fees.
Average ETH gas fees jumped to all-time highs of $40 on February 23, with the asset generating $50 million in fees that day alone. Data from Cryptofees also shows an average daily gas fee generation of $32 million for the past week on Ethereum, about four times that of Bitcoin, its closest competitor.