Dec 15, 2021 12:57 UTC
Dec 15, 2021 at 13:05 UTC
How One Company is Solving DeFi’s Biggest Dilemma
A blockchain oracle is a third-party service that connects smart contracts living on the blockchain with “real-world” data, extending their use case and functionality to provide better and more relevant services to users. Since blockchains are closed systems, they need to rely on a third-party source to feed real-world information to applications built on them.
Without external off-chain data, smart contracts have limited use in practice. Off-chain external data can vary greatly in type, from representing the current price of different cryptos such as BTC and ETH to weather conditions and even the outcome of an election or sporting event. The off-chain data is fed to blockchain smart contracts to help them execute transactions depending on the outcome of the real world event specified in the smart contract. For instance, a smart contract for a betting application makes a payout to the address that had made a correct prediction of an election or sporting event.
DeFi and blockchain applications are supposed to be more private, secure, and better governed than traditional applications and services. However, if they need to rely on a third-party service provider to get the data they need, they may lose the very security and accuracy they were designed to provide in the first place.
Security is one of the compromises that oracles have to make in order to execute transactions based on the external information. In addition to security, oracles are also faced with scalability and decentralization issues that together are referred to as the oracle trilemma. Existing oracles are faced with this existential challenge that is limiting their widespread adoption in DeFi and other blockchain applications.
In this article, we’ll review this oracle trilemma in more depth, including some of the common uses for oracles, and how SupraOracles is leveraging cutting-edge technologies to solve this issue and revolutionize the blockchain and DeFi industries.
What are the Most Common Uses for Blockchain Oracles?
Oracles are necessary for almost every kind of DeFi application, including:
- DeFi and crypto exchanges
- Crypto-based gaming
- NFT marketplaces
- Crypto staking/yield farming services
- Blockchain and crypto insurance
- Tokenization services
- Enterprise applications using private, permissioned blockchains, including:
- Supply chain monitoring
- Healthcare records
- Traditional insurance
- ESG and environmental reporting
Smart contracts can leverage real-world data relayed by oracles to power and facilitate the exchange of useful information on these applications, creating harmony between both the internal (blockchain) and external environments to maximize use cases.
The Oracle Problem is the Defining Issue in DeFi
The aforementioned oracle problem still poses a massive issue within the DeFi realm, and has remained unsolved to this day. In fact, oracle manipulations and hacks have cost crypto exchanges and other DeFi protocols (including their investors and users) over $10.5 billion so far this year.
Solving it could revolutionize the industry by allowing DeFi applications and services to become truly “trustless,”. Under this new dispensation, users would no longer have to put their trust in large centralized organizations. Rather, they can put their trust in code together with the developers and maintainers of the decentralized entities’ governance systems.
While current oracles have attempted to solve this problem, none have come close. One study of 190+ DeFi founders showed that they were highly dissatisfied with current oracle options. Specifically, they identified the data that oracles provide as too inaccurate, slow, and insecure, with limited guarantees that the data won’t be manipulated by outside bad actors, or even the oracles themselves.
The SupraOracles Solution: Security, Speed, and Accuracy
SupraOracles works as a powerful cross-chain oracle that helps businesses bridge real-world data to both public and private chains, enabling interoperable smart contracts to automate, simplify, and secure the future of finance.
Since they are not data sources themselves, oracles need to become more advanced in how they collect, analyze, and verify data from multiple areas and deliver them to smart contracts.
SupraOracles solution provides data that’s faster, more accurate, fully decentralized, and less expensive than the competition.
Innovation is the key to any oracle’s success, given that they cover broad fields and ensure a seamless flow of valid information between them and their sources.
SupraOracles rises above the rest when it comes to innovation with its cross-chain oracle solution, working both as an inbound oracle that delivers off-chain data to smart contracts and an outbound one that relays information from contracts to the real world.
The Keys to SupraOracles’ Innovation
Differing information processing methods on various blockchains determine how scalable these applications really are. SupraOracles has chosen to leverage parallel as opposed to sequential processing, as the latter puts a limit on transaction speeds and scalability.
Through parallel processing, unrelated transactions can be confirmed simultaneously to one another. This secures the future of financial markets, since a transaction from one side can be processed at the same time as another on a different and unrelated chain.
SupraOracles unique data processing methods nearly eliminate gas fees, making transactions not only faster, but much cheaper than any other oracle service available. Supra’s speed also allows it to reach finality in 3-5 seconds, significantly faster than Chainlink’s industry-standard, which often takes 120 seconds to reach full finality.
SupraOracles provides encryption that’s thousands of times more secure than its competition. Its multiparty paradigm of threshold cryptography enables secure distribution of trust in the operation of cryptographic activities, including key generation, signing, encryption, and decryption operations.
The main source of innovation here is seen through nodes that perform off-chain computation, achieving consensus with the final result stored on-chain at a low fee or directly to Supra native smart contracts. By ensuring the oracle layer is secure, the platform brings multiple solutions to issues like oracle manipulation, slippage, and the fair market value of digital assets.
As mentioned earlier, the scope of applicability that oracles cover is broad. Transmitted data can range from payments, the temperature from a sensor, football game scores, price feeds, and more.
This diversity of data means that random sampling is the key to getting the best information from a large sample. SupraOracles discovered how to make a singular node exist in multiple Distributed Key Generation configurations in parallel, organized, and randomized network topologies.
By doing this, the inbound and outbound information is free from tampering, since random sampling means that the oracle service requests get routed in a manner that ensures the path to consensus is both deterministic and unpredictable.
The Benefits of SupraOracles’ Solution
Crypto enthusiasts usually call for projects that are highly innovative and ambitious. SupraOracles promises just that by creating a new and innovative approach to the concept of how oracles function and operate, ultimately solving the trilemma of security, decentralization, and scalability.
SupraOracles’ project rises above the rest by revolutionizing its systems and implementing operational robustness to tackle network spamming and MEV (miner extractable value) attacks.
In this era of DeFi, users need an oracle with unmatched security features that keeps improving on features such as high throughput and sustained low transaction latency.
SupraOracles has secured its place in the crypto sphere as the go-to oracle that secures the future of financial markets, making innovation its guiding light towards building hybrid smart contracts for a better DeFi future.