Demystifying blockchain oracles: Part 1

2022-3-25 05:00

Simply put, blockchain oracles facilitate accessing, processing, and transmitting information between the outside world of off-chain data and smart contracts. That said, DeFi and applied blockchain apps wouldn’t be possible without them.

The data they transmit can come in various forms, given they allow communication with different off-chain systems–including web APIs, cloud providers, e-signatures, payment systems, IoT devices, and other blockchains, amongst others.

That said, it’s valuable to understand their potential when it comes to increasing blockchain’s utility, what are the most exciting developments aimed to mitigate the trust that is being placed in any of the current oracle solutions, and what roles will these arbiters of truth play in the future of decentralized services.

To answer these questions, CryptoSlate talked to some of the prominent experts on the subject, some of who are going to meet in Berlin this June at the world’s first technologically agnostic summit that’s fully focused on oracles.

Connecting smart contracts to information outside of their native blockchains

While they already represent a crucial piece of the infrastructure that makes DeFi possible– ensuring the validity of data in the blockchain ecosystems–oracles are likely to become more prominent as more use-cases move toward Web3. 

“When we looked at a lot of the use cases, we realized that we really needed to actually create the information–we needed to actually answer questions you can put in human language,” explained Edmund Edgar, Founder of Social Minds Inc., who created the world’s first smart contract oracle called Reality Keys.

Designed for Bitcoin scripting back in 2013, Reality Keys didn’t see much usage, however it served as a base for developing Reality.eth–an open source arbitration platform on Ethereum.

“Reality.eth is built to answer any question that you like, and instead of relying on a single entity, it’s crowdsourced,” noted Edgar, explaining how multiple people can answer the question, and the system with bonds was included in the design to incentivize them to answer honestly. 

While mentioning the integration with Gnosis Safe, Edgar noted that Reality.eth is being increasingly used for governance.

Originally a multisig wallet, Gnosis Safe developed into an operating system for decentralized autonomous organizations (DAOs).

Its SafeSnap module, which is an oracle-based solution that utilizes Reality.eth, enables decentralized execution of governance proposals through an on-chain execution of off-chain votes.

How SafeSnap works (Source: Gnosis)

“You take a vote of token holders using a system called Snapshot, and then you use Reality.eth to find out what the vote was, and to pass that information to the smart contract, so it can act on it,” Edgar explained the oracle’s role in the decentralized governance tool suite.

Minimizing the reliance on trusted parties

At this point, there are several different types of blockchain oracle services. The most basic typology makes a distinction between first-party and third-party oracles. While first-party oracles are operated by the API providers themselves, the latter are not operated by the owners of the information they serve, but act as middlemen between the data source and the blockchain.

“Some oracle services are centralized, while some are decentralized,” explained Steven Liu, Head of Development at NGD and Technologist of Neo Foundation, while adding how their native oracle solution combined different features from both designs. 

The Neo network offers a host of different features to its users, including a decentralized file storage system, an identity system, and an oracle system that enables its smart contracts to access external resources.

“Our native oracle API can be requested directly by a smart contract and it involves a node consensus process, which makes it a trustless decentralized service,” added Liu, noting that because it adopts an asynchronous pattern, the request-response processing mechanism doesn’t delay Neo’s block finality.

Neo Oracle Service request-response processing mechanism (Source: Neo)

As Liu explained, the Neo council chosen by NEO holders consists of 21 members which have various responsibilities. One of those is to elect oracle nodes that will provide reliable data to smart contracts.” 

“These nodes get paid and rewarded for answering oracle requests, however, the Council can remove and even replace them in the case of poor service or wrongdoing.”

When asked about some of the biggest challenges that are surrounding the current research and development of blockchain oracles, Edgar pointed out that thus far, “nobody has really built an oracle that works without trusted parties, while simultaneously being immune to bribery.” 

Oracles are crucial when it comes to utilizing blockchain technology for anything other than native assets, and their ability to leverage true decentralization and ambiguity emerged as a burning issue that will define future systems and services relying on integrity and security of the data.

While the most common approach relies on third parties that are providing the data and signing the information, token voting emerged as an alternative, more decentralized approach.

“Oracles determine a smart contract’s input which, in turn, affects what the smart contract actually does,” explained Hart Lambur, the co-founder of UMA, a decentralized financial contracts platform based on the Ethereum blockchain.

“While blockchain data becomes inalterable after it is recorded on the ledger, it is not verified before, leaving oracles, and by extension smart contracts, open to manipulation,” noted Lambur, arguing that UMA’s optimistic oracle combats this problem using a unique dispute resolution system. 

Anyone can push an answer on-chain, and there will only be a dispute if the answer is wrong. 

“We call this resolution system ‘optimistic’ as data is accepted as true unless it is disputed,” he said, pointing out that compared to traditional price-feed oracles, optimistic oracles can bring super-specific data on-chain in a way that doesn’t rely on nodes. 

Plugging into the optimistic oracle does not require using a contract launched on UMA (Source: UMA)

“Economic incentives maintain accuracy as anyone can earn rewards by responding to a query and would lose money if they are incorrect and disputed,” concluded Lambur.

Addressing data bias and agreeing on one absolute truth

“While we are able to form decentralized organizations, enabling token holders to vote on issues, in theory, there are situations in which it could be profitable to bribe those voters to vote in a certain way,” added Edgar.

Although the token holder voting systems proved to be quite robust in practice, that doesn’t necessarily mean that they can’t be manipulated, according to Edgar.

“You really don’t see these voting systems breaking right now, but you never know,” he argued, explaining that “with crypto, you will have things work for a really long time, and then someone will successfully attack one part of it, and then similar attacks will follow.”

“Augur, a decentralized oracle and prediction market platform, kind of has a design with no reliance on trusted parties, but it has what’s called a security bound,” added Edgar, noting that there is a certain amount of money that it can secure without, at least in theory, being “profitably attackable.” 

In extreme cases, Augur’s approach enables the system to fork into multiple copies–allowing people to use whichever version they like–ultimately revealing which of these systems is more valuable. This approach was originally proposed by Paul Sztorc in the Truthcoin Whitepaper. Edgar is currently working on a design that takes this a step further, in extreme cases forking an entire layer-2 ledger.

People who want to interact with each other ultimately need to agree on some kind of common view of the world–adhering to what they determine to be true. 

“With the kind of forking approach that Augur uses, it is possible that you end up with two economies,” commented Edgar, underscoring that “a blockchain can’t prove what worldview is correct, but we can allow each worldview to coordinate with itself, and allow people to talk to each other in whatever reality they want to.”

“We can also determine which worldview is the most valuable in cash terms–but again–that’s not necessarily true,” he added while concluding that “blockchains are a tool for coordinating, and the best that we can do is to coordinate between people with the shared worldview.”

The post Demystifying blockchain oracles: Part 1 appeared first on CryptoSlate.

Similar to Notcoin - Blum - Airdrops In 2024

origin »

High Performance Blockchain (HPB) íà Currencies.ru

$ 0 (+0.00%)
Îáúåì 24H $0
Èçìåíåèÿ 24h: 0.00 %, 7d: 0.00 %
Cåãîäíÿ L: $0 - H: $0.0064459
Êàïèòàëèçàöèÿ $0 Rank 99999
Öåíà â ÷àñ íîâîñòè $ 0.0910131 (-100%)

oracles blockchain part demystifying smart off-chain contracts

oracles blockchain → Ðåçóëüòàòîâ: 99


Ôîòî:

AccuWeather’s weather data reaches the blockchain via Chainlink (LINK) oracles

Blockchain technology has massive potential to change the way we store, use, and access data, but it hit a problem when it comes to importing real-world data onto the blockchain. This is an issue that Chainlink (LINK/USD) managed to solve via its oracle network, which has made it one of the projects with the biggest […] The post AccuWeather’s weather data reaches the blockchain via Chainlink (LINK) oracles appeared first on Invezz.

2021-8-6 18:16


Ôîòî:

Tron (TRX) to receive its first public oracle by the end of the quarter

The success of Chainlink (LINK) has shown how important public oracles are to the crypto/blockchain projects, and how sought-after they can be if done right. Now, the Tron blockchain is about to receive its own public oracle project, and not through a partnership with Chainlink — instead, Tron chain just saw the launch of a […] The post Tron (TRX) to receive its first public oracle by the end of the quarter appeared first on Invezz.

2021-3-17 13:57


Tezos Partners with Wolfram, A Computational Tool to Integrate Data Oracles on the Blockchain

In a post this Monday, Wolfram targets the high-speed network to build out its blockchain wing, Wolfram Alpha expanding the features and services available to developers. Johan Veerman, the chief technology officer of WBL, said, “Tezos is an exciting third-generation blockchain that features several services and functions that will expand what's available to our developers.

2021-3-3 21:25


Ôîòî:

The Many Facts Pointing to Chainlink’s Sergey Nazarov Being Satoshi Nakamoto

During the last few years, smart contracts and blockchain oracles have transformed the crypto industry, and one specific project called Chainlink is the most widely used oracle network to-date. Another interesting thing about Chainlink is the project’s creator, Sergey Nazarov has been a Satoshi Nakamoto suspect in recent times. Last year, a number of reports […]

2021-2-11 22:15


Ôîòî:

How A Little Bird Is Delivering Trust

Oracles are necessary to bring off-chain data and information into the blockchain Money’s Oracle blockchain technology is building the mechanisms used in the legacy financial system for the cryptocurrency space Money is also working on the Decentralized Finance equivalent of a credit score, which delivers a user’s DeFi history to lending protocols Leveraging trust in […]

2021-1-29 16:27


Paxos adopts Chainlink oracles to further adoption of PAX and PAXG tokens

Paxos, a crypto brokerage and infrastructure platform, today announced it is now working with Chainlink to leverage its market-leading decentralized oracle network. This will boost the adoption of the USD-backed stablecoin Paxos Standard (PAX) and the gold-backed token PAX Gold (PAXG) within the Decentralized Finance (DeFi) ecosystem—a parallel financial system built on the blockchain which allows […] CryptoNinjas.

2021-1-15 21:57


Ôîòî:

Matic Network Joins Ethereum as the Second Blockchain to Integrate Chainlink Price Feed Oracles

We are happy to announce that Chainlink has been successfully deployed live on Matic Network as our recommended oracle solution for developers. Matic is the second blockchain, after Ethereum, to actively integrate Chainlink Price Feed oracles! Five price feeds have already been launched on the Matic mainnet: MATIC/USD, USDC/USD, ETH/USD, USDT/USD, and DAI/USD, with manyRead MoreRead More.

2020-11-19 17:21


Ôîòî:

RIF Gateways Integrates Chainlink

The monumental rise of decentralized blockchain oracles projects such as Chainlink (LINK) and Band Protocol (BAND), among others, points toward the rapidly growing blockchain oracles space. While the vast majority of Ethereum-based smart contract platforms are integrating blockchain oracles into their ecosystems, RSK stands out by being the first Bitcoin-based smart contract platform to bridgeRead MoreRead More.

2020-9-1 20:56


Chainlink Acquires Cornell University’s DECO Project, to Enhance the Privacy of Data on Oracles

Chainlink, the decentralized oracle provider, has acquired Cornell University-based project DECO meant to enhance the privacy of oracles used on blockchain networks. Oracle-based data plays a critical role in maintaining the blockchain network, and with growing cases of hacks and ransomware, strengthening the accuracy, security, and privacy of the Oracle systems would eventually enhance the […] The post Chainlink Acquires Cornell University's DECO Project, to Enhance the Privacy of Data on Oracles first appeared on BitcoinExchangeGuide.

2020-8-31 16:26


Ôîòî:

Elrond (ERD) to Integrate DIA Oracles to Access Secure Off-Chain and Cross-Chain Data

Sharded smart contracts execution platform Elrond (ERD) to integrate DIA oracles to access off-chain and cross-chain data. Elrond Taps DIA for Oracle Needs In an announcement made today, Elrond CEO, Beniamin Mincu stated that the scalable blockchain protocol’s DeFi products and smart contracts will use DIA oracles to fetch off-chain and cross-chain data.

2020-8-21 21:00


Ôîòî:

Harmony (ONE) Grant to Bootstrap Growth of Chainlink-Based DeFi Applications

Harmony—a fast, sharded, and scalable blockchain network for decentralized applications (dApps), is integrating Chainlink—an interoperable network of secure and tamper-proof oracles. Accompanying the incorporation is a dedication of part of the $7 million grant to bootstrap the growth of Chainlink-based DeFi and cross-border finance dApps built on Harmony as per an August 5 update.

2020-8-5 19:07


Binance Smart Chain Testnet Adds Real-World Data With Chainlink’s Oracle Network Integration

Binance Smart Chain (BSC) announced the successful completion of the integration of Chainlink’s decentralized oracle on Twitter this Tuesday. The combination of Chainlink brings about ease in the development of decentralized applications on the blockchain by providing a direct link to external data sources, which saves developers time in creating their oracles. BSC, who launched […]

2020-7-24 20:20