Oracle

Oracle -

Blockchains and smart contracts cannot access data from outside of their network. In

order to know what to do, a smart contract often needs access to in- formation from the

outside world that is relevant to the contractual agreement, in the form of electronic

data, also referred to as oracles. These oracles are services that send and verify real

world occurrences and submit this information to smart contracts, triggering state

changes on the blockchain.

Oracles feed the smart contract with external information that can trigger predefined

actions of the smart contract. This external data stems either from so ware (Big-data

application) or hardware (Internet-of-Things). Such a condition could be any data, like

weather temperature, successful payment, or price fluctuations. However, it is

important to note that a smart contract does not wait for the data from an outside

source to ow into the system. The contract has to be invoked, which means that one

has to spend network resources for calling data from the outside world. This induces

network transaction costs. In the case of Ethereum, this would be “gas.”

There are different types of oracles:

 Software Oracles

handle information data that originates from online sources, like temperature, prices

of commodities and goods, flight or train delays, etc. The so ware oracle extracts the

needed information and pushes it into the smart contract.

 Hardware Oracles

Some smart contracts need information directly from the physical world, for example,

a car crossing a barrier where movement sensors must detect the vehicle and send

the data to a smart contract, or RFID sensors in the supply chain industry.

 Inbound Oracles

provide data from the external world.

 Outbound Oracles

provide smart contracts with the ability to send data to the outside world. An example

would be a smart lock in the physical world, which receives payment on its

blockchain address and needs to unlock automatically.

 Consensus-based Oracles

get their data from human consensus and prediction markets like Augur and Gnosis.

Using only one source of information could be risky and unreliable. To avoid market

manipulation, prediction markets implement a rating system for oracles. For further

security, a combination of different oracles may be used, where, for example, three

out of ve oracles could determine the outcome of an event.

The main challenge with oracles is that people need to trust these outside sources of

information, whether they come from a website or a sensor. Since oracles are third-

party services that are not part of the blockchain consensus mechanism, they are not

subject to the underlying security mechanisms that this public infrastructure provides.

One could replicate “man-in-the-middle attacks” standing between contracts and

oracles.

The robustness assurance of this “second layer” is of utmost importance. Different

trusted computing techniques can be used as a way of solving these issues. However,

this topic will need more attention, as secure oracles are a bottleneck for smart

contract security. If oracle security is not adequately provided, it will be a show stopper

for widespread smart contract implementation.

Oracle Coins:

1. Chainlink (LINK):

Chainlink’s decentralized oracle network provides the same security guarantees as

smart contracts themselves. By allowing multiple Chainlinks to evaluate the same data

before it becomes a trigger, we eliminate any one point of failure and maintain the

overall value of a smart contract that is highly secure, reliable, and trustworthy.

1. Band Protocol (BAND):

Band Protocol offers a decentralized data oracle by making data readily available to be

queried on-chain, using delegated proof of stake (“dPoS”) to ensure data integrity. It

aims to be the go-to data infrastructure layer for Web 3.0 applications by providing

decentralized, curated off-chain data to smart contracts through oracles managed by

its dPoS consensus mechanism.

1. Augur (REP):

Augur is a decentralized oracle and peer to peer protocol for prediction markets.

Reputation (REP) is a cryptocurrency, used by reporters during market dispute phases

of Augur. REP holders must perform work, in the form of staking their REP on correct

outcomes, to receive a portion of the market’s settlement fees.

1. API3:

API3 is the native token of the API3 project, that grants its holders full governance

rights in the API3 DAO and acts as collateral in the data feed insurance pool. Staking

API3 into the data feed insurance pool earns the staker a governable share of data

feed revenues, as well as inflationary staking rewards.

API3 is a DAO-governed project for the creation of dAPIs — fully decentralized and

blockchain-native APIs — which will be set up, managed, insured, and monetized at

scale by the API3 DAO. With dAPIs, API3 aims for the concept of an API to take the

next evolutionary step to meet the inevitably strict decentralization requirements of

Web 3.0 without employing third-party intermediaries.

API3 provides smart contract developers with oracle data feeds that are:

Free of middlemen

Source-transparent

Truly decentralized

Quantifiably secure

1. Tellor (TRB):

Tellor is a decentralized Oracle for bringing high value off-chain data onto Ethereum.

The system utilizes a network of staked miners that compete to solve a PoW challenge

to submit the official value for requested data. Tokens are mined with every successful

Tellor data point and the company takes a 10% dev share to support the development

of the ecosystem.

1. DIA:

DIA (Decentralised Information Asset) claims to provide financial institutions with an

immutable and verified single source of financial market data for any market and asset

type. DIA also claims to be an open-source, data and oracle platform for the DeFi

ecosystem. It is further claimed that DIA leverages crypto economic incentives to drive

supply, share and use transparent, crowd-verified price data and oracles on financial

and digital assets. This token is claimed to be a governance token.

1. Umbrella Network:

Umbrella Network aims to create a scalable, cost-efficient, and community owned

oracle for the DeFi and blockchain community.

1. HAPI:

HAPI is an on-chain cybersecurity protocol with trustless oracles preventing hacker

attacks.

It is designed to provide:

 real-time data with stolen funds and compromised wallets instantly to the end-user

 real-time data with smart contract security audits

 decentralization of data providers (elected by DAO)

 easy implementation (less than one dev day)

1. Nest Protocol (NEST):

The NEST Protocol is a decentralized network of price predicators developed based on

the Ethernet Square Network.

NEST provides a creative solutions, including collateral asset quotation, arbitrage

verification, price chain, beta coefficients, and other modules to form a complete

NEST-Protocol.

1. Oraichain Token (ORAI):

Oraichain is a data oracle platform that aggregates and connects Artificial Intelligence

APIs to smart contracts and regular applications.

The blockchain network is built based on Cosmos SDK along with Terdemint’s

Byzantine Fault Tolerance consensus that helps speed up transactions’ confirmation

time.

When ORAI mainnet is officially launched, the ORAI token is required to secure and

power the decentralized oracle network of validators. The native ORAI token is used

for:

 Staking for validators: all validators are required to stake ORAI in order to be

selected to create a block or fulfill data requests.

 Transaction fee: the ORAI token is required in order to run an AI request sent to the

Oraichain network.

 Participation in Oraichain Governance: the Oraichain network is organized in the

DAO manner, all protocol upgrades and parameter changes must be voted by token

holders.

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