Data oracles aren’t new; they’ve been used within IT traditionally to provide data feeds from large centralized databases into the services that require that information.
They’re the digital messenger that businesses rely upon for providing accurate and reliable information from a source, or a number of sources.
In the world of Web 3.0, built on blockchain technologies, data oracles provide a key service to decentralized applications (dApps), aggregating the data required to then trigger an action via the smart contract.
For example, a decentralized exchange like Uniswap might need the real-time ETH/ CUDOS pair price, as a token buyer has just placed a market order. The Uniswap smart contract requests the feed from the data oracle, and the data received then triggers the action on the smart contract to issue at ‘X’ price. The smart contract then writes this onto the blockchain.
The great thing about blockchain like Ethernet is that they are entirely autonomous. The smart contract is self-fulfilling and is fully controlled by the blockchain, where no entity, middle man or rule-maker acts as an adjudicator. All that is needed is the information sent by the oracle for the smart contract to self fulfil.
However, there are complications in creating a blockchain, which is supposed to move away from third parties, that is technically reliant on a third-party oracle. Trusting this third party source could lead to fraudulent data, which could prompt the smart contract to self fulfil under false pretences. If the data source was to be hacked, for instance, this would pose threats to the integrity of the smart contract.
Research is however being conducted to mediate these issues. And re-decentralisation is at the core of their ambition in order to restore security to the network. Trusted Execution Environments (TEE’s) are one such example, whereby extra secure hardware is used to avoid breaches from hackers.
Despite these complications, companies like Augur and Chainlink are already adopting the new technology, demonstrating their confidence in the fulfilment of smart contracts through oracles.
It’s clear that oracles and smart contracts are here to stay. And like any technology, they are subject to complications during their early adoption stage. But with the right cunning minds, it’s evident that there is a real necessity for the birth of such a powerful technology.
The Cudos Network is a layer 1 blockchain and layer 2 computation and oracle network being designed to ensure decentralized, permissionless access to high-performance computing at scale and enable scaling of computing resources to 100,000’s of nodes. Once bridged onto Ethereum, Algorand, Polkadot, and Cosmos, Cudos will enable scalable compute and Layer 2 Oracles on all of the bridged blockchains.