According to a recent report, the blockchain industry has over 81 million active users, demonstrating the space’s continuous innovation despite being only a decade old.
The significance of oracles in the growth of the blockchain industry cannot be overstated.
Oracles are protocols that allow smart contracts in the blockchain industry to interact with external data, according to Cryptopedia.
Smart contracts are computer programs that run on a blockchain and automate a series of transactions when certain conditions are met. Thus, smart contracts contribute to the blockchain industry’s complete decentralization by allowing transactions to take place automatically and without the intervention of a third party.
On the other hand, Oracles have struggled with centralized control because some protocols are controlled by a single entity and serve as the sole data source for smart contracts. To provide smart contracts with increased security and transparency, oracle networks must also be decentralized if blockchain technology is to achieve its primary goal of decentralization.
Evolution of blockchain and its impact
LUNA was a bloodbath in the cryptocurrency market on May 12, 2022, when its price plummeted to nearly zero, causing widespread concern worldwide. As a result, TerraUSD (UST), the world’s third-largest stablecoin, entered a death spiral.
Because of the high selling volume of $LUNA and $UST, there were many discrepancies across various platforms due to oracle inconsistency, which led to exploitation by bad actors on the Venus protocol, resulting in a loss of $11 million as hackers took advantage of Venus’s inconsistent prices.
Because there is no single point of failure, decentralized oracles help to mitigate these risks, and they have proven to be more data-accurate in times of high volatility. Decentralized oracle protocols employ distributed ledger technology to improve security and reduce hacks caused by centralized oracle protocols. Decentralized oracles have effectively secured smart contracts and enabled seamless off-chain data verification. One of the significant issues with introducing oracles to the blockchain is that it contradicts its ethos of trustlessness. One solution is to ensure that blockchain-connected oracles are decentralized and not governed by a single entity.
Web3 Decentralized Oracles
QED is a decentralized oracle protocol with a robust economic model that connects blockchains, smart contract platforms, and off-chain data resources. QED is a decentralized oracle that aims to achieve trustlessness by distributing data points among multiple entities and modeling the blockchain network.
DelphiOracle, QED’s base software, is the most widely used protocol on WAX.io, the world’s most trusted blockchain ecosystem for NFTs, dApps, and video games. The DelphiOracle has served as a multi-party source of truth for more than four years, providing real-time prices for asset pairings on blockchain networks. DelphiOracle has proven itself in the industry, and QED is built on it. The purpose of QED is to solve problems inherent in existing models of oracles and blockchain systems.
Band protocol offers “community-curated” data sources, allowing dApp operators to participate in data feed management and curation, solving the oracle problem, and providing smart contracts with reliable data feeds. Band Protocol is a cross-chain oracle network that enables decentralized applications (dApps) to integrate price and event feeds, effectively linking the virtual and real worlds. Since its inception in 2018, Band has attracted a lot of attention and is widely regarded as one of the leading decentralized oracles in the space
As the world of decentralized applications (dApps) evolves and grows, so does the need for increased innovation in decentralized oracle technology. To drive mass adoption, high scalability necessitates decentralized oracles that can be just as responsive without sacrificing quality or accuracy. Decentralized oracles such as Band and QED are significant steps toward complete decentralization of technology, and this is only the beginning.