Blockchain oracle
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A blockchain oracle is a third-party service for smart contracts. Information from the world encapsulates multiple sources, so that decentralized knowledge is obtained. Oracles provide a way for the decentralized Web3 ecosystem to access existing data sources, legacy systems, and advanced computations. Decentralized oracle networks (DONs) enable the creation of hybrid smart contracts, where on-chain code and off-chain infrastructure are combined to support advanced decentralized applications (dApps) that react to real-world events and interoperate with traditional systems.[1]
Examples
Oracles are also used in DEFI, gambling, Metaverse gaming, NFT-s, and Smart Contract insurance.[5]
Concerns
If an oracle relies on a single source of truth (centralized), that can lead to issues: the data source can be hacked in a man-in-the-middle attack, or altered by its owner, in order to sway smart contracts. Decentralized oracles (consensus oracles) increase the reliability of the information provided to smart contracts by querying multiple data sources, thus distributing trust between participants. However, this does not achieve trustlessness, since oracles are not part of the main blockchain consensus, and thus not part of the security mechanisms of public blockchains.[6]
References
- ^ "A systematic literature review of blockchain-based applications: Current status, classification and open issues". ScienceDirect. March 2019.
- ^ Peterson, Jack (30 November 2020). "Augur: a decentralized oracle and prediction market platform". arXiv:1501.01042 [cs.CR].
- ^ Beniiche, Abdeljalil (2020). "A Study of Blockchain Oracles". arXiv:2004.07140 [cs.CR].
- ^ "Blockchain Oracle: Types, Uses and How it Works". GeeksforGeeks. 27 September 2023. Retrieved 5 April 2024.
- ^ "What is an Oracle in Blockchain?". LearnCrypto. Retrieved 5 April 2024.
- ^ "A systematic literature review of blockchain-based applications: Current status, classification and open issues". ScienceDirect. March 2019. Retrieved 4 April 2024.
Sources
- Kustov, Vladimir Nikolaevich; Selanteva, Ekaterina Sergeevna (2022). "Mutual Recognition Mechanism Based on DVCS Oracle in the Blockchain Platform". Utilizing Blockchain Technologies in Manufacturing and Logistics Management. Advances in Business Information Systems and Analytics. IGI Global. ISBN 978-1-7998-8699-0. Retrieved 2024-04-16.
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