With the massive growth in popularity of blockchain technology since the past few years, new and unique sets of applications have made their way into the space, providing traders in the market with more opportunities to play around with. Blockchain technology has also stimulated the development of a massive variety of decentralized marketplaces that are not only secure but are also quite open with their intentions in the space.

Although transactions are stored securely inside of a blockchain, the development of the smart contracts feature has added an extra layer of advancement in conjunction with blockchain tech, firstly made popular with Ethereum. Decentralized applications (DApps) powered by blockchains such as Ethereum have been dominating traditional business solutions for quite some time now, forging new and unique use cases that were previously thought to be impossible.

Smart contracts themselves have also been facilitated using oracles. Decentralized applications being powered by the Ethereum blockchain have mainly been used to process transactions, but to go beyond that type of usage, the applications must work with the off-chain world and direct the data they receive into smart contracts. For that to be possible, blockchain oracle technology was introduced, allowing smart contracts to connect with real-world data, events and payments.

As of now, a variety of third-party solutions are present including inbound, outbound, software and hardware-based oracles, that are helping to develop more unique applications and can take advantage of blockchain technology.

Oracle networks, developed with a consensus including the Chainlink protocol give rise to end -to-end decentralization, that is vital part involved in keeping the entirety of the blockchain system protected, through which they function. Smart contracts have gained many enhancements in performance, features and compatibility through oracles, letting them gain a better level of trustworthiness and clarity.

With the growth in utilization of hybrid smart contracts, a greater level of attractiveness and functionality can be gained in comparison to on-chain systems that do not prefer to work with oracles.

Basics of a VRF

Blockchains such as Bitcoin are being affected by a significant issue of the distribution of decisive consensus based on equality. In conjunction with that, another issue of gaining the power to include a fresh block into the blockchain, plus also having the probability of success. There have been solutions presented to resolve this issue, however the one that stands out the most is Verifiable Random Function (VRF), which relies on random picks, a sort of lottery style solution.

Verifiable Random Function (VRF) is mainly known as the public key. This public key is a type of hash that is keyed according to cryptographic methods. This type of hash is only capable of being processed by the one who possesses the private key. Despite whoever the primary owner of the private key is, if anyone can manage to get a hold of that private key, then it means that they are able to validate the originality of that certain hash.

VRFs are made to remove the ability of enumeration when it comes to hash-powered data structures. VRFs are also compatible with the functions of smart contracts in the situation where randomness is a major part.

Now that the basics of VRFs have been discussed, we can further elaborate on it by understanding Chainlink VRF.

What is Chainlink VRF?

Several decentralized applications in both the blockchain gaming and the non-fungible token (NFT) industry need a random integer generator provider that is protected from being messed with and is also able to be verified. The provider must also consist of modern functions like the processing of airdrops, managing a lottery system or the development of games that are based on the mathematical concept of probability.

In the case of Chainlink VRF, it is powered by decentralized oracle network to help establish and improve blockchains that are already present, allowing them to obtain data coming off-chain. It also includes the transfer of blockchain data into systems that fall outside of the blockchain system.

The main highlighting feature of Chainlink VRF is that it helps to achieve randomness through cryptographic methods by utilizing a collection of Chainlink nodes that move data into smart contracts, while also managing a consensus mechanism via a group of nodes. By providing random number generation (RNG) to smart contracts, Chainlink VRF helps developers to contract new and unique solutions, taking advantage of RNG to power their blockchain-based applications.

Since the random number generation mechanism is highly secure, it is unable to be meddled with by anyone including node workers, users or any exploiters, because each oracle inside of the decentralized oracle network is allotted a unique private and public key, in which the private key is managed off-chain and the public key is managed on-chain.

Each time that a fresh random number is asked for, Chainlink VRF generates a random number and its validation data. The validation data is moved for verification and is highlighted on-chain before it being used by the application it is intended to work for. This validation data helps to make sure that the data is not able to be messed or changed any sort of entity to gain personal benefits. This process is great for developers seeking to gain trust from users that are highly concerned over security issues.

With all this in mind, we will now move towards the working of Chainlink VRF.

Working of Chainlink VRF

Chainlink VRF mainly works by enhancing the functionalities of smart contracts. There is a series of steps that need to be understood to gain an understanding of how Chainlink VRF works.

With the initialization of a smart contract, it provides a signal to the Chainlink oracle network that the generation of a random number is being requested. This signal is used in the generation of the random number. Each of the oracles makes sure to use a private key to generate the random number. When the resultant including the proof is highlighted on-chain, the public key of the oracle and the signal is used to authenticate the process.

This authentication method takes advantage of the widely used verification feature associate with the blockchain platform. The contracts can utilize the random number that have been verified in the blockchain system. Because these random numbers also verified, this gives Chainlink VRF a significant advantage over others.

In the case of a node being targeted, the node is not able to bring any change or effect since it is not able to cross the encryption walls on the chain. The worst that can happen is that the node is not able to handle the incoming requests that are recorded on the blockchain, developing a permanent presence in the chain. With this, users can query valid tests, meaning that they can part ways with the nodes that fail to respond or cannot show any validated records.

Regardless of the operational state of a node, the random number generated is not changed. Nodes experiencing heavy traffic can ignore request. Following the Chainlink delivery mechanism, nodes showing bad performance are not only fined but can also be removed from their duty of generating random numbers. This is because bad node operations lead to a major level of financial loss, considering both short-term and long-term states.

With all this mind, we can understand that once the Chainlink VRF connection is fully established, it is unable to be dabbled, unless the issue occurs where the node is problematic, however that still a minor issue since those nodes can be taken care of and the security levels of the systems remain intact.

Additionally, Chainlink VRF carries a great benefit with it. With the increase in overall number of users, the overall cost behind paying node operators also rises in parallel, leading to node operators gaining the confidence to keep their performance and security levels well maintained. Users can also ask for encryption security, meaning that the more they pay, the more security levels they get. Using all this generated capital, the security and the performance metrics of the blockchain system is improved.

Essential Features of Chainlink VRF

Here are several different essential features of Chainlink VRF that help it to stand out in the space.

• Each step of the random number generation process is respective of certain rules and regulations applied.
• The random number generation results by Chainlink VRF are never biased towards anything.
• Making use of smart contracts helps to receive all the random number generations once the verification process is complete.
• Oracles do not have the power to bring any changes to the final numbers generated.
• Chainlink VRF ensures game integrity with proof, enabling it to establish a greater level of trust.
• Exploiters or even node operators do not have any authority or power over bring any changes to the random numbers being generated.

Specifications of Chainlink VRF

Chainlink VRF is primarily based on the Goldberg Verifiable Random Function (VRF). The randomness means that nobody has a key, and nobody can do any predictions regardless of the cost. This defines the mechanism for the probability distribution it carries.

Specifications include:

• The VRF holds a key that goes through the process of encryption by an Oracle machine.
• The oracle has a public key connected to it.
• The Oracle merges the public key with the VRF key and the Chainlink task ID.
• When a smart contract asks for a random number, a seed it provided.
• In order to check if the resultant is not able to be predicted, unpredictable values are pushed into the seed.
• The VRF then combines the smart contract seed with various sets of data to avid replay attacks and provide essential security to the contract, with even more security measures.
• When the VRF confirms the resolution of the seed, more results will be asked for, since it is a requirement of the smart contact from oracle via transmitting in the Ethereum log.

Uses of Chainlink VRF

Chainlink VRF can be used in a variety of applications across the financial space that are associated with the process of secure random number generations. Here are a few of the major applications surrounding Chainlink VRF.

Gaming:

Users can obtain the lottery smart contract, which basically verifies that the winners of the lottery have been selected using random number generation technique. This randomness can be assured by the individuals on-chain and helps to provide an assurance over the usage of smart contracts to benefit from a chance to win something. To better understand this, we can take the example of the game called Pooltogether.

Pooltogether is lottery game that is powered by the Ethereum blockchain. The game’s main idea is about saving and putting together deposits from different users, then hosting a lottery either daily or weekly. The winner of the game is also awarded with the interest that is generated from the deposits. Pooltogether takes advantage of the random number generation system provided by Chainlink to generated secure random numbers and select out winners.

This helps to make sure that security of the random number generation is traceable and can be checked in case there is any issue or uncertainty regarding the results generated.

NFT Issuance

Chainlink VRF can be used to give out NFT rewards. This will assist players in having access to checkable proof that supports their NFT-based assets resulting from random number generation. For example, Wildcards have managed to utilize Chainlink VRF to enhance the level of randomness in their systems in order to be an example for animal conservation on a global scale.

Improving Player Circumstances

Chainlink VRF, player experiences can be developed or improved, letting you obtain the strategies and fun to levels to find out different results of battles when it comes to player versus player games and other types of situations. As an example, the game Facegolf utilizes Chainlink VRF to obtain a random solution that is both secure and is on-chain, meaning that they can help their new users to dodge questionable activities.

Chainlink VRF Version 2

With its focus towards enhancing their systems, Chainlink introduced the Chainlink VRF version 2 earlier this year which has a variety of improvements and enhancements attached, helping developers to enhance experiences involving randomness. Version 2 includes the power to have multiple random number generations for a single payment on-chain, helping to increase response rates and reducing payment costs and fee.

Version 2 also supports up to a hundred smart contracts to request random number generation via just a single LINK account, which is taken care off by either a developer or the associated owner. Many other beneficial changes come alongside version 2, but one of the main highlighted advantages is the enhanced level of customization, meaning that developers can set the number of block confirmations that are required before the random number generation and deliverance process.

Because of these major improvements, Chainlink VRF has managed to become the best choice for developers looking to build new and unique decentralized applications on the Ethereum network, because of its excellent security levels and helping developers to build more practical applications that can take advantage of verified live data. Providing blockchains to gain a connection with external data sources, Chainlink VRF has managed to contribute a major part of the development of blockchain tech.

Chainlink VRF Version 2 and Polygon

Back in the month of May 2022, the Polygon network announced on their official website that they are integrating Chainlink VRF version 2 on their systems, because it will help Polygon developers to take advantage of secure, fast and cost-efficient source of randomness and to develop decentralized applications that generate fair results in blockchain-powered games, secure NFT minting and have many other unique use cases.

Polygon has highly praised Chainlink VRF for its efforts in the development of blockchain tech and smart contracts, even going as far as calling Chainlink VRF the industry standard for random number generation solutions. The website also provides several clickable links to more extensive documentation for those interested to learn more about the integration.

Final Thoughts

With the growth of the utilization of contracts on blockchain systems, Chainlink VRF provides a secure and traceable way to not only enhance the power of smart contracts but also generate secure and fair random numbers for several decentralized applications having their main use cases associated with the concept of probability and chance. Having a good RNG system is essential for applications such as lottery games to provide fair results, which can be verified easily in case of any uncertainty.

With Chainlink VRF already pulling off enhancements with version 2, there is not telling how many new and unique use cases will come into the light that were seen as impossible before. The development of blockchain technology is essential for the advancement in the future of the financial space, as more and more individuals and institutions have shifted their strategies in order to adopt it and make use of the advantages it provides.