True Decentralization Can be Achieved With Oracles
03 Avril 2022 - 8:04AM
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The term ‘oracle’ has become quite commonly used within crypto
circles across the globe in recent years, and rightly so. This is
because these novel offerings are designed to connect various
blockchain projects with a wide array of off-chain data, thus
allowing for the advent of many novel use cases. That said, most
traditional oracles are faced with two core issues. Firstly, they
require a centralized entity/intermediary to facilitate their
access to external, real-time data — as a result of which third
parties can potentially alter the data being supplied to it.
Secondly, centralized oracles often have to forego many of the
privacy advantages put forth by smart contracts, thereby posing
major risks to the system’s overall security. A smart contract can
be thought of as a program/transaction protocol designed to
automatically execute, administer and note relevant events and
actions as per the terms of a predefined digital agreement.
Decentralized oracles explained As highlighted earlier, centralized
oracles serve as single, stand-alone entities that provide data
from an external source to a smart contract operating within a set
governance framework. As a result, they, more often than not,
feature a single point of failure that can result in them being
corrupted or being attacked. On the other hand, decentralized
oracles can be visualized as a group of independent oracles where
each node operating within the network is capable of acting on its
own accord — i.e., having the ability to work solo and retrieve
data from an off-chain source. Since they don’t have any sort of
dependence on a “single source of truth”, the overall authenticity,
and veracity of the data being supplied to the associated smart
contract can be verified with an extremely high degree of efficacy.
To elaborate, most high-quality Decentralized Oracle Networks
(DONs) provide their clients with highly specific security features
such as data integrity proofs (that use cryptographic signatures);
data validation modules using multi-layer aggregation (so as to
eliminate downtime-related issues); crypto-economic guarantees as
well as other optional features such as zero-knowledge proofs. From
an operational standpoint, decentralized oracles are ideal for use
within a complex business environment but need a high level of
financial investment — especially when it comes to setting up the
project’s native infrastructure as well as paying for its general
upkeep/maintenance. The issues with oracles in their present form
While the transparency and decentralization aspect of most
oracle-based platforms is quite intriguing, at least on paper, it
should be noted that such propositions are only valid insofar that
the information being supplied to a particular blockchain is
“tamper-proof”. Now that being said, it is worth looking into the
question of who really has the power to authenticate this data? In
fact, this question has been looked at in-depth by many blockchain
experts and arises whenever a digital asset has to be linked to its
physical counterpart. As an example, whenever the transfer of
ownership relating to a physical commodity (for example a necklace)
has to take place between two people, the smart contract associated
with the deal has to be supplied with data ensuring the validity of
the supplied information. To achieve this, a third party is usually
required for the verification of events taking place in the real
world. And while many projects have sought to alleviate this pain
point in recent years, the issue is still quite prevalent today.
Decentralized Oracle solutions Chainlink One of the most popular
oracle networks in the market today, Chainlink is best described as
a decentralized network of nodes capable of delivering its users a
wide range of real-time info from external data sources. The
platform’s native smart contract architecture is automated and is
able to perform actions as and when certain predefined conditions
are satisfied. Chainlink’s network is designed to help process
real-world data associated with a number of feeds ranging from
asset prices to sports data to shipping data to weather data. As a
result of its multifaceted utilitarian structure, the platform is
currently being used by a number of prominent DeFi projects such as
Aave, Kyber Network, Synthetix, amongst others. QED QED can be
thought of as a future-ready decentralized oracle designed to
connect a wide number of blockchain networks and their associated
smart contracts with external data sources seamlessly.
Operationally speaking, QED Oracles utilize ‘external collateral’
as a bond to their smart contract theory mitigating many systemic
risks that may have otherwise entered the fray. Furthermore, the
platform uses a ‘reliability scoring’ mechanism that determines the
oracle’s capital efficiency while weeding out any poor performers
from within the ecosystem. Lastly, QED has been built atop a
blockchain that features no single point of failure and does not
make use of a centralized verification system — allowing for a
higher level of operational efficacy and overall security. Witnet
Simply put, Witnet is a decentralized oracle network (DON) that not
only connects smart contracts to real-world data sources but also
allows third-party software to gather certain, specific info
published by a given web address at any given point in time in its
lifecycle, that too with verifiable proof. It is worth mentioning
that Witnet comes with a highly developed, holistic blockchain as
well as a native digital asset that miners have the option of
securing in lieu of retrieving, attesting and delivering web
content.
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