A detailed review and comparison of Algoracle and other blockchain oracles.
As decentralized finance is quickly becoming one of the leading applications of cryptocurrency technologies, there is growing interest in decentralized oracles, especially on the Algorand Blockchain. Decentralized finance (or DeFi) is a blockchain based financial system where transactions are independent of any banks or other intermediaries. Instead, transactions rely on smart contracts which are automated programs that run when predetermined conditions are met. Typically, these are used to execute an agreement so that all participants can expect a certain outcome without any intermediary involvement. Understandably, this would require a high level of reliability and accuracy. That’s where oracles come in. Algoracle, being the first oracle network built on the Algorand Blockchain, fill's this need in the Algorand ecosystem.
Two people betting on an NFL match using smart contracts would simply make their bets, and their funds would go directly into the contract. The digital agreement between two parties would be entered and the contract would seamlessly ensure the terms are enforced. The winner would take home his or her winnings instantly after the games results are finalized, no middle man, no hassle, no wait and no risk of anyone withholding winnings. Both parties would have access to a permanent and verifiable transaction record providing transparency at the transaction level that was simply not available for the average consumer before.
Similarly, taking a loan, renting an apartment, buying a home, using smart contracts will provide everyday people with more transparency and huge savings. Experts project that blockchain technology will lead to up to $20 billion worth of savings per year by 2022. With such large sums on the line, the need to maintain accuracy and a flawless execution is paramount. Oracles are the data feeds that connect real world information to the blockchain so smart contracts can perform properly. The two individuals betting on the NFL match should be able to walk away from the bet knowing the correct scores were entered into the smart contract. With the use of accurate and secure oracles, the potential to revolutionize and simplify the way we make transactions is enormous.
Currently smart contracts are still on the cusp of being more widely used as oracles are still being developed. We’ll take a deeper look into what oracles are and the top five oracles projects on the market right now.
When it comes to interoperability, blockchain and the IT industry have a lot in common. Poor user experience and inefficiency are common complaints. This is a result of network connection issues which can lead to an unpredictable and cumbersome experience. Blockchains cannot be directly linked to traditional systems to interact with the current world. This problem has a substantial impact on their usability and widespread acceptance. Coined the ‘Oracle problem’ these restrictions are the greatest obstacle in the way of decentralized financial systems.
If there is no mechanism to send or retrieve data from systems constructed outside of blockchains, digital ledgers stay isolated, like a computer without an internet connection. The oracle problem is considerably more serious than many realize since most smart contract use cases rely on interfacing with the real world. To address this issue, blockchain developers have established decentralized oracles to address this issue.
Decentralized oracles make it possible to combine data from several sources. Oracle and non-oracle sources of data can be combined in various ways using decentralized oracles.
A thriving alternative to the traditional banking system, decentralized finance (DeFi) has emerged as an open yet secure industry with almost $200 billion in total value locked up, which is more than the GDP of several countries.
An internet connection and a Web3 wallet to use the permissionless lending, borrowing, saving, trading, and other decentralized apps (dApps) that have spread over the DeFi is all a user would require to access its limitless potential. The days of making a call, being on hold, or setting up an appointment with a bank manager to open an account or request overdraft would be a thing of the past.
Much of the credit for Defi's spectacular ascent goes to the Ethereum’s blockchain and its self-executing contracts, which eliminated the need for a third party to execute them. If Ethereum symbolizes a building where transactions occur, then smart contracts would be the name above the entrance. It’s no surprise that smart contracts are often referred to as the "crypto industry's backbone."
As noted, blockchains are like computers that don't have access to the internet when it comes to connecting and interoperating. The combination of blockchains (immutable on-chain code) and Oracles (secure off-chain data), is referred to as "hybrid smart contracts," and lays the groundwork for sophisticated blockchain applications by generating tremendous synergy.
As a result, oracles allow previously isolated networks to access trustworthy external information and connect with legacy systems, resulting in smart contracts that can respond to real-world events and integrate with current business processes.
Additionally, they serve as a filtration mechanism that evaluates the reliability of external data (usually ensuring up-to-date price feeds)—an essential function when performing crypto-related transactions.
Algoracle hyper focuses on keeping accurate and up to date real-world data on a smart contract with as little infrastructure as possible(enough to move data and secure the system). To ensure the data is fully decentralized, Algoracle keeps the collection and aggregation mechanisms as decentralized as possible. The service allows feed providers to submit a URL endpoint, and nodes, which can be run by nearly anyone, aggregate the vaues and place tham on smart contract for consumers. Algoracle is about to launch on the Algorand blockchain in March-April, 2022.
To learn more, about Algoracle, download and read the detailed whitepaper.
Chainlink is the foremost decentralized blockchain oracle network which is built on Ethereum. Data and information from off-blockchain sources are sent to on-blockchain smart contracts using ChainLink oracles. It's ChainLink's job to supply smart contracts on the blockchain with real-world data. When specific criteria are satisfied, smart contracts will execute automatically. To pay for services on the network, LINK tokens are the digital asset tokens used. When employing a single centralized data source, this method removes the dependability difficulties.
When a smart contract needs data, the process begins on a smart contract enabled blockchain. This smart contract seeks information in a requesting contract.
Using the ChainLink protocol, this request is registered as an “event," and an SLA contract (ChainLink Service Level Agreement) is created on the blockchain to obtain this data off-chain. If an Oracle provider's track record is checked to validate its legitimacy and performance history, then the ChainLink reputation contract is used to assess and eliminate unreliable or disreputable nodes.
For requests that do not specify a group of nodes to be used, ChainLink's order-matching contract acts as an intermediary, delivering the request to ChainLink nodes and taking their bids on the request (where the requesting contract does not opt to use a specific set of nodes)
For an accurate output, the ChainLink aggregating contract verifies and/or reconciles all of the data from the chosen oracles.
As soon as the requesting contract requests data using "ChainLink Core'' software, ChainLink nodes take that request and transform it into a computer language that the data source understands. As a result of this new translation, the request is sent to an external application programming interface (API). In ChainLink Core, the data is converted into on-blockchain language and delivered back to the ChainLink Aggregating contract once it's been gathered and processed.
Requesting ChainLink node operators are paid using LINK by contract holders. Based on demand and current market conditions, ChainLink node operators determine prices for the data they can give.
For ChainLink operators, LINK is a way to show their commitment and reward good service. Nodes must deposit LINK with ChainLink as a way of demonstrating their commitment and rewarding good service.
ChainLink's reputation contract considers the magnitude of a node's stake when matching nodes with data requests. Requests are more likely to be fulfilled by nodes having a more significant stake (and thus earn LINK tokens for their services). On the other hand, the ChainLink network punishes defective or dishonest nodes by levying a fee on their stake of LINK.
The ERC-20 token standard is used to build LINK on Ethereum. Digital currencies, like Bitcoin, may be used to buy and sell LINK.
Band Protocol is a decentralized crypto-blockchain. Instead of being an alternative to ChainLink, it was designed from the ground up as a rival, and the distinctions it has from ChainLink are enough to make it a contender.
For the most part, the Band Protocol utilizes its blockchain, BandChain, based on Tendermint, with a BFT consensus mechanism (DPoS) that operates in the Cosmos environment. On one hand, when it comes to ChainLink, there is no link blockchain because it is built on Ethereum. On the other hand, Band Protocol functions as an "oracle" for smart contracts by aggregating and linking real-world data and APIs to them.
The Band Protocol is transversal because it can be used on several blockchains and focuses on delivering services to decentralized finance.
There are many DeFi dApps in existence that require pricing feeds. It is possible to use any real-world data, such as athletic events, weather conditions, random numbers, or anything else you can think of with Band Protocol's Oracles. Developers can create their Oracles using WebAssembly.
The Google Cloud integration is one of the band's most recent successes. Using Google Cloud Public Data, financial time series data may be analyzed in real-time and accurately. Band Protocol Oracle data is available on Google Cloud Public Data, allowing traditional, hybrid blockchain, and cloud applications to use unique data feeds from Decentralized Oracle services.
The Kylin Network aims to deliver a wide range of high-quality data sources and analytical tools that are cost-effective and efficient. The Kylin Network founders understand that oil, gold, or money will no longer be the most precious assets for anyone in the future. Data will be the medium. Your data includes everything you do online, everything you communicate with a friend, and even your IP address. Data, marketing, AI model training, and even behavior control may all be done with data. As a result, we require a platform that enables us to manage and monetize our data independently.
Polkadot is the foundation on which Kylin Network plans to build a cross-chain platform for the data economy. For DeFi and Web 3.0, it will be the data infrastructure. Instant but trustworthy and legitimate on/off-chain market data and social data sources will be provided by using the Polkadot Substrate Framework for any application or blockchain (such as parachain or parathreads).
The following are some of the most essential Kylin Network features and highlights:
● This software provides a query engine and RESTful API for third-party apps and external analytics tools.
● Kylin Data Oracle is a robust decentralized data feeding protocol that provides many real-time data sources and complements and synergies off-chain users.
● There is an open marketplace for the exchange and pricing of data in the Kylin Data Marketplace. It is possible to gather both off-chain and on-chain data with Polkadot for a meager price.
● The KYL is the Kylin Network's native token, and it is used for governance and other functions. The decentralized data network can't function without $KYL.
Tellor allows for an off-chain data point such as BTC/USD, to be requested using their decentralized oracle. This value is then added to on-chain data sources, which can be viewed by all Ethereum smart contracts and the mining community. This initiative will harvest data from miners to serve its clients with off-chain data. If the data is correct, miners will be rewarded for submitting it on the blockchain.
Tellor uses a classic Proof-of-Work (PoW) method to achieve maximum decentralization and security. Tokens for TRB are not offered for private or public sale; instead, miners create them all. Teller's native token may be used to pay, reward, or dispute payments within the Tellor ecosystem. However, due to the project's scalability and growth challenges, there has been a release of TellorX, and the company has just finished conducting an audit. TellorX went live in Q4 of 2021.
Instead of the Proof-of-Work technique, TellorX will use the Proof-of-Stake (PoS) algorithm (PoW). To make data submission more versatile and robust, TellorX will be connected with cross-chain capabilities and transmit data in bytes.
In December 2019, NEST was deployed on the Ethereum network as an Oracle protocol. The NEST protocol's native token is the NEST token.
"Quote mining" is the unique "mining" technique used by NEST to stimulate off-chain pricing. NEST has a group of high-quality DEFI users that appreciate the ethos of decentralization and NEST consensus. The NEST Oracle is used for lending, flash swapping, and stable currency pegging.
To get NEST tokens, miners must submit a price quote and pay a fee.
When quoting a price of 1 ETH = 200 USDT, miner X has to enter 10 ETH and 2000 USDT into the quote and pay 0.1 ETH, which is 1% of the quoted price, for the 1% commission. NEST tokens are awarded to Miner X.
For a period of 25 blocks and five minutes after miner X submits the assets and prices to the quotation contract, the assets and prices are verified. Everyone can trade either ETH or USDT if they feel the price offers an arbitrage opportunity at this time. As a result of this process, the market value of miner X's product remains constant. If it does not remain constant, an arbitrator will adjust the price. After the verification time, Miner X can take back the assets. The price reported by miner X is included in the price feed if it survives the verification period.
The question of staking and mining is a hot one right now. Both are supported by NEST. Using Huobi Pool, you may stake NEST to earn ETH or use the NEST DAPP to do so.
The NEST Oracles have only 5% developers and 80% quote miners so that the project will be highly decentralized and market-oriented.
According to blockchain consensus, NEST's price Oracle program thoroughly verifies the price data, whereas LINK's indirect Oracle program can only trust the nodes that submit data. Secondly, the Oracle protocol NEST is highly decentralized and can never be shut down which has long-term advantages.
Many high-quality DEFI users are part of the NEST community, and they are highly grateful for the NEST consensus. Core developers in the blockchain and financial innovation fields within the NEST community will significantly affect NEST's ecological growth in the years to come.
Aside from the blockchain, smart contracts and oracles are two essential components of decentralized finance. Each project is responsible for creating applications that consumers find engaging. Contrary to popular belief, while speculation has long been the primary use of distributed ledger technology (DLT), there is reason to believe that the future of decentralized ledger technology is only getting started.
When it comes to long-term success, a reliable data flow is essential. Providers of data services that ignore oracles do so at their peril and that of their Web3.
Of course, with so many oracle services available, a company's reputation is critical when comparing oracle service providers. Because oracles sign and publish their data into an immutable public blockchain ledger, users may examine and show their previous performance history using interactive dashboards such as market.link and reputation.link.
Oracle networks and oracle node operators may be transparently assessed using these "reputation frameworks.” A smart contract's oracles can then be selected based on the information provided by the contract users. Furthermore, oracle service providers can leverage their off-chain company reputation to provide customers with additional assurances of dependability.
Today, Goracle is launching our Price-Pair Mainnet-Beta to the Algorand community.
Oracles are important in enabling a new generation of use cases. Here are just 5 ways Goracle can make this happen.