- DeFi relies on real-world data for smart contracts and that’s often validated through Chainlink, one of the world’s largest oracles
- Oracles, data gateways between the real world and the blockchain, are computationally intensive and require secure networks. Swisscom has both.
Swisscom, one of Switzerland’s largest telecommunications companies, announced today that it is joining oracle network Chainlink.
In the blockchain industry, oracles are third-party intermediaries that provide smart contracts and decentralized applications with real-world data that allows for contract execution. Chainlink is one of the market leaders in this space and aggregates price data from multiple oracles to produce what it calls a “consensus value”.
As manipulation of this data could lead to material changes on smart contracts, Chainlink requires a secure network in order to maintain data validity.
In an interview with Blockworks, Sergey Nazarov, the co-founder of Chainlink, explained that for Swisscom this is an infrastructure play to get exposure to the decentralized finance (DeFi) space and broader blockchain industry without having to purchase mining equipment.
After all, Chainlink rewards network participants that can operate at scale and maintain a high level of uptime — something that Swisscom can do by virtue of being a telecom.
“Chainlink is a system that rewards highly reliable node operators,” Nazarov said. “[It allows telecoms to be a] winner doing the things they already do, which is providing high uptime and high security for infrastructure. That’s the distinction because our system doesn’t compensate people based on ownership of mining equipment or ownership of tokens.”
T-Systems, a subsidiary of Deutsche Telekom, parent of T-Mobile, also runs Chainlink nodes. Both Swisscom and T-Systems are already large IT service providers for the financial industry in Switzerland and Europe.
Effectively, for the companies, this is the beginning of a shift to the era of decentralized finance by simply replicating what they offer to the traditional finance space.
Swisscom’s digital asset team sees no end in sight to the growth of decentralized financial applications, the company said in a statement.
Nazarov explained that this is a good matchup for telecoms as the Chainlink system doesn’t “compensate people based on ownership of mining equipment or ownership of tokens,” but rather creates a “virtuous cycle” of rewards for data that’s delivered securely.
“If you’re great at delivering reliable infrastructure, that’s the model if you want to participate in,” he said.
Chainlink, the twelfth biggest token by market cap, is currently trading at $23.04 down 4.1%, according to CoinGecko.