In Greek mythology, a prophet (note: the same as "oracle" in English is an oracle) can know the oracle and spread it to the world. Today, blockchain oracles can also transfer information between different systems. The blockchain cannot communicate with external data sources in essence, and can only store the historical data of users on the chain. As a middleware, the blockchain oracle machine can connect the blockchain with off-chain data. The oracle machine transmits off-chain data to the on-chain, which greatly promotes the development of the Web3 industry and activates various innovative applications such as decentralized finance. If you have valuable data in your hands, you can monetize it by creating a blockchain oracle.
"Oracle" is a broad concept in the industry, and there are many oracle protocols on the market to choose from. The most mainstream of these is Chainlink . Chainlink integrates with many L1 blockchains and the protocols deployed on them. Although there are many choices, different oracle solutions adopt different processes and mechanisms when transferring data between Web2 and Web3. However, regardless of the solution, nodes face the same challenges, that is, how to maintain API interfaces, transfer data quickly and securely, and develop technical expertise to help users create and manage oracle nodes. The blockchain oracle machine can access and obtain external data through the API interface, and use the data to trigger the execution of the smart contract or upgrade the state of the blockchain application.
Challenges to Oracle Adoption
1
Maintain the API interface
Whether it is Web2 or Web3, the API interface has the same life cycle, namely: creation, management, security and interaction. The key is to make it easy for developers to deploy, iterate, and automate APIs. If the API is properly managed, developers can perform various operations, such as controlling, promoting and packaging their own API. Being able to authenticate identities, manage traffic, and coordinate is key to keeping data secure, because APIs are pointless if they are not secure. Finally, provide developers with various tools to help them easily access and browse all API interfaces created by the enterprise, which will greatly improve work efficiency and eliminate bottlenecks. To efficiently utilize API interfaces and deploy blockchain oracle nodes, every link in its life cycle must be handled to ensure a smooth and efficient experience.
2
Timely and secure data transfer
APIs require data to function properly, but there are other security risks to be aware of. Network congestion or poor connection quality can affect the performance of the API. The availability and accuracy of data must be guaranteed, especially financial transaction data, because these data points can only be transmitted once, and repeated entry will bring irreparable consequences to the enterprise. Even when data can be transmitted efficiently, it is possible for the data to be maliciously tampered with. In this case, companies upload tampered data, and their reputation can be ruined by it, which will eventually lead to irreparable consequences.
3
Create and manage blockchain oracle nodes
Chainlink has created high-quality documentation to help users create and manage nodes, but it still doesn't solve all problems. One solution is to adopt "node-as-a-service" (node-as-a-service), which delegates the management of all nodes to the service provider. This can be regarded as a strategy, but not everyone wants to entrust a third party to complete this work. Many people want to use vertical field tools to assist them in creating and managing nodes.
Blockchain oracle service has unlimited potential
The emergence of the oracle machine allows the blockchain to access various off-chain data, which greatly promotes the development of Web3 blockchain technology. There are 4,000 libraries connected to Chainlink on GitHub, which is enough to prove the popularity of oracles. Blockchain oracles such as Chainlink help users create nodes and distribute economic incentives to data providers. Decentralized financial protocols such as AAVE, Compound, and Maker require off-chain Price Feeds to support financial products such as options, futures, and synthetic assets. Insurance protocols such as Arbol use off-chain rainfall data to “settle parametric crop insurance contracts and settle claims based on rainfall in an area.” Another project is Etherisc, which uses off-chain flight data to provide users with flight delay insurance. The prerequisite for the normal operation of these projects is that the data provider must effectively manage its own API interface and ensure continuous and accurate data transmission. Blockchain is an emerging technology, and oracles have been around for even less time than blockchain, so new projects are popping up every day.
