How do Chainlink Oracles make money?

Question

been researching this for a while. It is my understanding that the job market on Chainlink website, offers jobs for a small fee (in the range of 0.1 LINK). But I also know that according the architecture , and more specifically this article here :

https://docs.chain.link/docs/fulfilling-requests/ , Specifically point number 6 under 'Create a request to your node' , it says that the Node Operator (off chain) , needs to have sufficient ETH in order to be able to send their data on chain again (through a callback to their Oracle Smart Contract). This costs A LOT of money, depends on the network congestion and can go as high as 200$ in some cases! This makes the 0.1 LINK fee insignificant.

Does the node operator really pay this? Or is it delegated to the initiator (data requesting smart contract)? And if so does, this mean that to request a piece of data it can cost up to 205 $ (assuming 200 $ TX Fees in peak times + link cost)? Does this make sense?

Any help on how this functions is appreciated.

Answer 1

I'm what's known in Chainlink terminology as a "Community Node Operator". We provide smart contract developers with off-chain access via Chainlink's DirectRequest model.

Using DirectRequest, developers can retrieve off-chain information as well trigger off-chain compute.

You're right that node operators pay for the gas of writing back answers to the blockchain and that can get very expensive on chains like Ethereum mainnet when the gas price rockets up.

However we take that into account when pricing up a job for a client developer. For example a job on Ethereum mainnet might get charged at 3LINK per transaction, whilst the same job on Polygon might only cost 0.15LINK.

The other variable that comes into play when pricing jobs is the fluctuations of LINK/ETH - which as a kind of "foreign exchange variance" in the business model of a node operator. The node operator is paid in LINK, but the costs are in ETH (or MATIC or whatever).

Chainlink's "Official Node Operators" have greater responsibilities and need to provide price feed updates irrespective if the gas price 8Gwei, 80Gwei, or 300Gwei. So for certain periods of time those jobs can run at a loss.

I hope this provides some insight.

Answer 2

The fee for a job is not fixed at 0.1 LINK, and data provider node operators can decide how much to charge for the job. You can find a list of existing data providers in the official document, and it is easy to see most nodes charge 1-3 LINKs for Ethereum mainnet jobs.

And as Ijonas said in his answer, node operators receive LINK and spend ETH, so the fluctuation of LINK/ETH should be taken into consideration. If the price of ETH goes up greatly in a very short time while LINK price does not go up, node operators could be at loss in the period of time. What they can do is to update the service fee, maybe from 1 LINK to 2 LINK, to avoid future loss.

Answer 3

If smart contracts were to request a random number on ethereum mainnet and the ethereum token price skyrocks, gas would be incredible expensive. When the chainlink nodes respond to a request for randomness done by said contracts , they pay the gas fees & do external execution. So to avoid this, chainlink nodes have a calculated variable called "gas_price per link " based on the price of the actual chain so that they never go bankrupt