This paper presents for the first time the Smart Grid Paradigm: the Link. Having a standardized structure, the Link can be applied to any partition of the power system: electricity production entity, storage entity, the grid or even the costumer plant. From this paradigm are extracted three architecture components: the “Grid-Link”, the “Producer-Link”, and the “Storage-Link”. The distributed Link-based architecture is designed. It allows a flat business model across the electrical industry and minimizes the amount of the data, which needs to be exchanged. It takes also into account the electricity market rules and the rigorous cyber security and privacy requirements. The interfaces between the all three architecture components are defined. The power system operation processes like load-generation balance, dynamic security and demand response are outlined to demonstrate the architecture applicability. To complete the big picture, the operator role, the corresponding information and communication architecture and the market accommodation are also described.