Oracle networks play a vital role in maintaining the integrity of cryptocurrency markets, allowing smart contracts to tap into secure and reliable data sources — vetting external data feeds, and passing on the information to smart contracts in a decentralized way. Data from IoT devices, web APIs, weather data, price feeds, and more, are needed to aid smart contracts in their decision-making and contract execution, and oracle solutions are the only trusted means for them to do this.
Smart contracts hold hundreds of billions of dollars' worth of capital, and there is a clear need for projects that can solve this “oracle problem” with secure, reliable infrastructure. Here are three oracle networks that are leading the way.
By far the most ubiquitous name in the oracle space, Chainlink is a multi-chain oracle network that “provides reliable, tamper-proof inputs and outputs'' for smart contracts. Chainlink is the largest tokenized oracle solution by market capitalization and one of the most established, launched in 2017 by Sergey Nazarov.
Chainlink’s decentralized oracle network connects smart contracts to myriad real-world data feeds like asset prices, price feeds, sports data, shipping data, weather data, and more. Their solution can be used on any blockchain, and is relied upon by a number of leading DeFi protocols including Aave, Kyber Network, Synthetix, Ampleforth, and more.
If you are keen to learn more or want to buy Chainlink (LINK), you can do so on our website or through one of our partner wallet applications.
Band Protocol is a cross-chain oracle network that allows decentralized applications (dApps) to integrate price and event feeds, effectively connecting the decentralized world to the real one. While a year younger than Chainlink, Band has garnered a significant amount of attention since its 2018 launch, and is widely viewed as the largest competitor.
To solve the oracle problem and provide smart contracts with reliable data feeds, Band offers “community-curated” data-sources that allow dApp operators to participate in the management and curation of data feeds. In this sense Band takes a different approach to Chainlink, having dApps access data via its smart contract data points as opposed to through external oracles.
The Witnet protocol aims to give smart contracts a decentralized and trustless way to access any online data source, the same fundamental objective and means as its competitors, incentivizing oracles to perform data retrieval tasks in return for tokens (WIT). The key to Witnet’s solution is a reputation system that incentivizes oracles to fulfill data requests honestly, and disincentivizes inaccurate data reporting by downgrading reputation score.
Oracles — called “witnesses” — are selected randomly by the Witnet protocol to mine and fulfill data requests, being chosen on the basis of their reputation score. Benevolent oracles will earn additional reputation points and become more likely to be selected for tasks, and in turn earn tokens upon completion of tasks.
Oracle solutions are a vital component of decentralized markets, enabling smart contracts to maintain the integrity of off-chain data feeds and bring the technology utility for use in real-world applications. While the space remains nascent, these three projects are establishing themselves at the forefront of oracle solutions and are furthering the use cases of smart contracts today.