Chainlink fundamentally operates as a decentralized oracle network that connects blockchain smart contracts to external data sources and computation. The system architecture consists of multiple independent oracle networks, each serving specific data feeds or computational needs. The fundamental design uses a decentralized network of node operators who stake LINK tokens to provide data and computation services. The security model combines cryptographic proofs with economic incentives, where node operators are rewarded for accurate data provision and penalized for malicious behavior. Chainlink's architecture supports various oracle functions including price feeds, verifiable randomness, and cross-chain interoperability. The fundamental innovation addresses the oracle problem by creating tamper-proof connections between on-chain and off-chain systems while maintaining decentralization.

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