GM, DOers!
It’s time to bring ALL the world’s data on-chain!
In a recent announcement, Chainlink has released their new platform Functions, which will allow developers to effortlessly tap into web2 APIs and bring their data on-chain.
But what does it mean for web3, really? 🤔
Simple. Functions will make it easier to onboard new users and companies to web3 by demonstrating the added value that web3 layer apps can bring to existing web2 apps.
Imagine supporting your favorite artists on Spotify directly with on-chain crypto payments linked to your streaming activity. No intermediaries, no fractions of a cent – just fair compensation for the music you love. 🤟
Or, how about no more payment hassles for FedEx deliveries – bring their data on-chain and send automatic payment as soon as your package arrives! 📬
The opportunities are limitless!
This symbiotic relationship will create a bridge for users to explore the exciting new web3 domain through the familiar lens of web2 apps, making the transition smoother and more intuitive.
So what can we do with this new-found power?
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The Power of Chainlink Functions in Web3
Chainlink Functions have opened up a whole new world of possibilities for developers in the web3 space.
Although available before Functions as Any API, it was difficult to use due to the need for manual work and upkeep. Functions streamlines the process, enabling developers to quickly retrieve data from web2 APIs in just a few minutes.
Really, the key difference between simply pulling data from an API and using Functions to pull that same data, is that Chainlink uses a technology called Decentralized Oracle Networks (DONs).
They add a layer of trustlessness and decentralization by incentivizing the DONs to compete with one another to provide the most accurate results, and be punished for lying.
Of course, if the data from a web2 API is already corrupted, Decentralized Oracle Networks (DONs) cannot intervene.
DONs compete to provide accurate reporting of off-chain data to on-chain networks, rather than verifying the authenticity of the incoming information.
Nevertheless, oracle networks are enormously powerful and essential to the existence of many of the features and applications we are familiar with in DeFi and web3.
And Chainlink Functions have introduced a new dimension to what is possible.
Catch up on web3 fundamentals by taking our FREE Web3 Rabbit Hole Course!
But Why Do We Need Off-Chain Data?
Because, let’s be real, practically all of the world's data lives off-chain. And for dApps to be even remotely useful for billions of users, they need to get access to off-chain data.
By accessing off-chain data through APIs and other external sources, web3 applications can incorporate a wider range of data and use cases, allowing for more complex and sophisticated applications.
Moreover, off-chain data can provide valuable information for smart contract execution and decision making, such as real-world events, market data, and user behavior, making it a crucial component in decentralized application (dApp) development.
Web3-ifying Web2, Whether They Like it Or Not
So what about the use cases?
There are too many to count, and certainly too many to list in this humble piece of content. Check out this thread by Michael from Chainlink on some cool ones:
11 Things you can build with the new #Chainlink Functions 1/ @OpenAI API Create a smart contract that asks an AI for a daily investment recommendation and then makes that trade.
— Michael Robinson ⬡ (@77MichaelR)9:42 PM • Mar 2, 2023
Perhaps let’s instead think about this more holistically.
The release of Chainlink Functions raises interesting questions about the relationship between web2 and web3 companies.
Developers can now effectively create unofficial “web3 layers” on top of web2 apps and platforms that do not come with any web3 features themselves.
This piggy-backing on the network effects and reach of web2 applications creates a new fascinating dynamic between the two worlds.
It has an enormous positive potential for all involved, but risks persist.
One potential issue is the fact that web2 apps can suspend access to their API or stop their API services altogether. 🛑
Additionally, each API comes with its own terms of use, which could be problematic for developers creating monetized applications using these APIs.
This raises concerns about data ownership and control. If users want to use their data for purposes not offered by the web2 app, but that utilize the same data sets, they may not have a say in how their data is being used.
If you’re curious about trust in the digital world, and the role data ownership plays on web3 and the internet at large, check out our recent article 3 Paths to a Trustless Future.
However, this could also push web2 companies to rethink their approach and embrace the potential of web3. 🤗
They could create a paid-access API for dApps, or work with developers to create monetization opportunities that benefit both parties.
This could lead to a new era of collaboration between web2 and web3 companies. Symbiosis!
Functions can allow a web3 project to tap into a web2 app’s data feed, and by extension, its infrastructure that’s facilitating this data, without having to set it up themselves, and instead simply offering an add-on use case to the existing application!
Imagine, for example, building a charity sports events dApp that leverages Strava’s API to fetch participant data such as distance run or steps.
With the power of smart contracts, the payments can be automatically distributed to the charity in real-time, providing a level of transparency and accountability that was never before possible.
Furthermore, smart contracts could then facilitate the creation of charity run leaderboards, offer attendance badges (POAPs), and give redeemable NFTs or NFT events passes from fitness and sports apparel brands who want to reward the most active members in charity runs, and much more.
By leveraging the data from the Strava API, developers can thus create an entire ecosystem of incentives and rewards for participants, all while supporting a good cause.
This is just one of the ways that participants can trustlessly get involved and contribute to a good cause while exploring the potential of web3 and its many exciting applications.
The possibilities are truly endless, and we can’t wait for a new generation of dApps to leverage this groundbreaking platform!
Will Chainlink Functions disrupt web2 business models? Reply to this email 😉
🤝 Together with SegMint: Revolutionizing the way we think of digital ownership.
Wouldn't it be cool to buy and hold parts of an expensive NFT and share its ownership and utility, like airdrops or exclusive access?
Well, say hello to SegMint.
SegMint is a non-custodial NFT platform set to launch in Q3 of this year and aims to allow users to easily create access keys and share ownership of NFTs with friends and community members.
The team is going through their Beta release soon and has opened up their waitlist for Web3 Academy listeners.
If you want to stay at the forefront of web3, sign up for SegMint's waitlist today!
Uncover More of Web3’s Latest News
- NFT Lately takes you on a journey through the history of Bitcoin NFTs: Source
- Web3 music platform Audius introduces token-gating for exclusive access experiences: Source
🟣 Hold on, DOers!
The “Academy” in Web3 Academy is there for a reason, so we’ve got some homework (and rabbitholing) for you to do 😉
EXPLORE
Curious to learn more about Chainlink and the important role it’s playing in web3? Take a look at this Beginner’s Guide to Chainlink, written by… ChainLink.
LISTEN
Catch up on our last week’s podcast episode where Kyle and JayBird interview Mohsen El-Sayed from Ledger to talk about their new Stax hardware wallet. He explains its origin story, how the Ledger ecosystem works, and shares his point of view about the future of wallets. You don’t want to miss this one!
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Thanks for reading and we’ll see you on Friday! 🫶
