Chainlink is a decentralized blockchain oracle network built on Ethereum. The network is intended to be used to facilitate the transfer of tamper-proof data from off-chain sources to on-chain smart contracts. The creators of the network say it can be used to verify whether the parameters of a smart contract are met in a manner independent from any of the contract's stakeholders by "connecting the contract directly to real-world data, events, payments, and other inputs".
Chainlink's LINK token is an ERC677 token, an extension of ERC20. Tokens act as data payloads, feeding the required data from off-chain sources to smart contracts, which then act accordingly in response to the data provided by the token. According to Chainlink, the trade value derived from these tokens is used to pay node operators for retrieving data from smart contracts, and also for deposits placed by node operators as required by contract creators. Tokens can be stored in any ERC20 wallet, as the ERC677 token retains all the functionality of an ERC20 token.