Introduction
Problem Statement
Oracles play a crucial role in blockchain ecosystems by addressing the challenge of securely and reliably bridging the gap between on-chain and off-chain data sources.
However, the current landscape of oracle solutions presents several critical challenges that need to be addressed.
Centralized Control: Many existing oracle systems rely on a centralized authority to retrieve and validate off-chain data. This centralized control introduces a single point of failure, vulnerability to manipulation, and potential collusion risks, which undermine the trust and reliability of the oracle.
Obstructive token models: Many oracle systems introduce an ERC-20 token that has to used by the participants within the oracle system to pay for services. Data consumers are required to pay the data providers in oracle tokens on top the gas tokens required to pay for the blockchain transaction. This creates unnecessary complexity for smart contract developers having to deal with multiple currencies in one transaction, as well as exposes node operators to "forex" risk as their revenues are accounted for in the oracle token yet their costs are accounted for in the native gas token of the blockchain.
Substandard developer experience (DX): Smart contract developers currently suffer due to a lack of good developer tooling providing insight and clarity in the call chain between their smart contracts, the oracle solution, and the off-chain world they're trying to access. There is a lack of "local" tooling enabling developers to run a production-quality oracle whilst developing their smart contracts and to then deploy those contracts together with on-chain oracle service.
Data Manipulation Risks: Since smart contracts rely on the accuracy and integrity of off-chain data, there is a concern that malicious actors may manipulate or provide false information to the oracle. Such data manipulation can lead to incorrect contract execution and financial losses for participants relying on the smart contracts. Current oracle solutions do not provide easy-to-understand human readable proofs of their own activity to engender the trust they seek.
Limited Scalability: As the adoption of blockchain technology grows, the demand for oracles increases exponentially. However, current oracle solutions often struggle to handle high volumes of data requests, leading to delays, congestion, and increased transaction costs within the blockchain network.
Objective and motivation
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