DeFi’s emergence highlighted the true capabilities of blockchain technology and showcased its utility in finance. With DeFi seeing a surge in growth, as more and more organizations and projects leverage its capabilities, there was also a massive increase in highly secure and decentralized information feeds.
This is where oracles come into the picture – and with DeFi’s growth, their use case has become more important and relevant than ever.
What Exactly are Oracles?
Oracles can be defined as third-party services that utilize smart contracts on a blockchain to retrieve any required information from the off-chain world or data from an external source.
Essentially, they act as data sources which can be fed into smart contracts, requiring them to retrieve real-time data from any external data source.
Because blockchains and smart contracts are closed ecosystems, oracles are an essential bridge between the blockchain and the real world, enabling more robust services on-chain. Therefore, it is essential that they are extremely secure.
Oracles perform several key functions, such as:
- Listening – Oracles monitor the network, scanning for any request for off-chain data.
- Extracting – Once oracles receive a request, they extract information from external data sources, such as off-chain APIs.
- Formatting – Retrieved data is adjusted into a blockchain-readable format.
- Validating – They generate cryptographic proof that attests to the performance of an oracle service.
- Computing – Perform secure off-chain computations for smart contracts.
- Broadcasting – Broadcast the transaction on the blockchain to send the data to various smart contracts.
Problems Facing Current Oracles
Current oracles face several problems, the most pressing being the blockchain oracle problem. This issue needs to be overcome to see smart contracts on networks, like Ethereum, achieve mainstream adoption. In essence, the oracle problem is a simple limitation: blockchains do not have the ability to pull data from or push data to any external source. Because of this, blockchains need oracles to see the full utility.
Their isolation is what makes blockchains extraordinarily reliable and secure. However, for smart contracts to realize their full potential, they need access to off-chain data.
For example, smart contracts dealing with finance require market information to determine settlements; trade finance smart contracts need access to trade documents, loan contracts need access to fulfill conditions, crop/farming contracts need access to detrimental weather and patterns that will affect farmers. etc.; In fact, blockchain oracles have several more use cases, with the most prominent ones being in DeFi, Insurance, Gaming and NFTs, Sustainability and Enterprise. Certain is not available on blockchains, and neither is any information off-chain directly accessible to the blockchain. Hence, the oracle problem. And, while it might seem simple — just find an oracle solution — oracle technology requires extreme care.
Current oracles also have a host of limitations, such as:
- DeFi Exploits – The current designs of oracles and cross-chain bridges have several vulnerabilities, which have led to the loss of over $730 million in 2020 alone, with prominent hacks such as the Spartan DeFi Flash Loan attack, the BurgerSwap flash loan attack, and the Poly Network hack, which was among the largest cryptocurrency hack ever that occurred when hackers exploited cracks in the system.
- Transparency Issues – Data or prices reported by oracles are opaque and cannot be examined by any entity to determine the accuracy of the data. This can lead to potential malicious behavior.
- Price Delays – Any transfer of an asset price from off-chain to on-chain can create minor price delays and deviations. However, in a dynamic market, the time delay can be a significant factor.
- Accountability – Currently, there is a lack of accountability regarding oracles. This could lead to data manipulation thanks to collusion between external data sources. It also increases the risk of incorrect data provided to the oracle. A lack of accountability also means a lack of security, leading to smart contracts being manipulated. This needs to be addressed as they are a critical part of the blockchain ecosystem.
SupraOracles: The Next Generation Cross-Chain Oracle
SupraOracles is the flagship project from the Entropy Foundation, bringing DeFi applications and its Multi-Helix Ledger to developers around the world. The project is backed by a diverse team with experience in a wide range of fields, such as cryptography, IoT Solutions, enterprise solutions, DeFi, oracle research, and others.
SupraOracles bridges the gap between traditional markets and the Web 3.0 ecosystem, focusing strongly on cross-chain interoperability. As a powerful cross-chain oracle, businesses and institutions can utilize it to bridge real-world data and price feeds to public and private blockchains. Its solution can deliver data directly on-chain, offering better scalability and security while enhancing smart contracts’ use cases. It also offers some of the fastest speeds, security, and finality on the market, outstripping other oracles in the space. Their price feeds also have a high level of accuracy, making them extremely efficient.
Its aforementioned flagship feature, the Multi-Helix Ledger (also called the Unitychain), offers high scalability and better security while mitigating network downtime. Unitychain also allows for parallel processing, while features such as threshold cryptography and random sampling ensure further security.
Standout Features of SupraOracles
SupraOracles has several standout features that make it one of the top cross-chain oracles in the DeFi space:
- True Decentralization – Nodes on SupraOracles don’t just rely on data from one source, instead pulling data from multiple avenues. This system also ensures good behavior through incentives.
- Scalability – Nodes exist in several Distributed Key Generation configurations. These are organized in parallel in randomized network topologies.
- Secure – SupraOracles utilizes its nested architecture of “Tribes” and “Clans” which enables parallel processing by leveraging cryptographic primitives such as threshold cryptography, random sampling and distributed key generation.
- Near-Instant Finality – SupraOracles offers on-chain refresh rates between 3-5 seconds, which stands out compared to their nearest rival, Chainlink, which requires 120 seconds to achieve full finality.
- Interoperability – SupraOracles is blockchain-agnostic and compatible with multiple blockchains, such as Ethereum, Polygon, Solana, Cardano, Polygon, and Binance Smart Chain, among others.
SupraOracles is allowing blockchains to access off-chain, real-world data accurately and reliably. They’ve also already announced a slew of noteworthy partnerships across the blockchain and DeFi spaces. The project is the answer to blockchains looking for access to off-chain data in a fast, secure, and scalable manner.
The future of cross-chain oracles is finally here.