How to Set Up a Chainlink Node and Send Transactions (Part 1)

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Introduction

Chainlink is a decentralized oracle network that enables smart contracts on blockchain to securely access real-world data. This guide will walk you through the fastest way to set up your own Chainlink node and send a transaction request.

What Is a Chainlink Node?

Chainlink operates on the Ethereum network but is not an ERC20 token—it uses ERC677 contracts instead.
ERC677 extends ERC20 by allowing data transfer during transactions, triggering receiver contract logic and expanding smart contract use cases.

Current Chainlink functionalities include:

  1. Distributed price feeds
  2. Verifiable randomness (VRF) for on-chain random numbers
  3. External adapters for off-chain resources
  4. Other oracle network services

Its robust Node and Contract Market makes Chainlink the top choice for DEX integrations.

Benefits of Running a Chainlink Node

Certified node operators receive rewards for maintaining network services.

Step-by-Step Setup Guide

Prerequisites for Kovan Testnet:

  1. A Linux cloud server (Ubuntu recommended)
  2. PostgreSQL database
  3. An Ethereum node

This tutorial uses Google Cloud, but Alibaba Cloud (with PostgreSQL support) is also viable.

Step 1: Configure Google Cloud
  1. Register at cloud.google.com and link a Visa card (new users get $300 free credits).

  2. Create a VM Instance:

    • Name: chainlink-kovan-icy
    • Region: Default (US)
    • Machine Type: Standard (2 vCPUs, 8GB RAM)
    • OS: Ubuntu 18.04 LTS with 10GB SSD
    • Enable HTTP traffic during creation.

  3. Set Up Networking:

    • Search for networking in the Cloud Library and apply the first configuration.

  4. Create PostgreSQL Instance:

    • Select PostgreSQL (Chainlink’s required database).
    • Enable private IP under Connections.

  5. Add Database User:

    • Default admin: postgres (update password via settings).
    • Create a new DB instance (e.g., chainlink-kovan-db).

👉 Need a reliable cloud provider? Try Google Cloud

Step 2: Run the Chainlink Node

Follow Chainlink’s official node guide with these steps:

  1. Access the Server:
    Use Google’s built-in browser client or SSH via Cloud SDK:

    gcloud compute --project "your-project-id" ssh --zone "us-central1-a" "chainlink-kovan-icy" -- -L 6688:localhost:6688

  2. Install Docker:

    curl -sSL https://get.docker.com/ | sh
sudo usermod -aG docker $USER

  3. Configure Environment:

    mkdir ~/.chainlink-kovan
echo "ROOT=/chainlink
ETH_URL=wss://kovan.infura.io/ws/v3/YOUR_INFURA_KEY
DATABASE_URL=postgresql://user:password@DB_IP:5432/postgres" > ~/.chainlink-kovan/.env

  4. Launch Node:

    sudo docker run -p 6688:6688 -v ~/.chainlink-kovan:/chainlink --env-file=.env smartcontract/chainlink local n

Key Takeaways

  1. Authenticate via gcloud auth login.
  2. Establish SSH tunnel for UI access.
  3. Use the correct node startup command.

Sending Transactions

Ethereum Sync Modes:

Chainlink transactions require Ethereum integration—either self-hosted nodes or external providers like Infura.

👉 Explore Ethereum node solutions here

FAQ

Q: Can I use a different cloud provider?
A: Yes! Alibaba Cloud or AWS also work, but PostgreSQL setup may vary.

Q: Why choose ERC677 over ERC20?
A: ERC677 supports data payloads in transactions, enabling advanced smart contract logic.