The oracle blockchain is a third-party platform that connects smart contracts with the outside world and vice versa. Most of these platforms use network oracles that search, query, verify and retrieve real-world data into smart contracts running decentralized applications (DApps); Others use APIs (Application Programming Interface).
In general, oracles are incentivized with a platform token, Chainlink $LINK, for example, to follow the rules of the platform and retrieve reliable and useful data. The more adoption we see of blockchain oracles, the more useful their token will be, thus increasing its value and rewards for oracles.
There are dozens of oracle blockchain vying to be the best on-chain data reliability solution. With so many options, it can be difficult for developers and companies to choose a solid option. Don’t worry – this article brings together the best industry-dominant blockchain oracles in 2022.
Chainlink provides off-chain data for a wide range of blockchain-based ecosystems: layer-1s. Layer-2s, sidechains, and all kinds of DApps that run on smart contracts. It was launched as an Ethereum-based oracle in 2019 by SmartContract, a San Francisco-based software company. In December 2021, Eric Schmidt, the former CEO of Google, joined Chainlink as a strategic advisor for future projects.
Chainlink provides on-chain services to hundreds of blockchain platforms and software companies, including Avalanche, Aave, Ampleforth, Compound, Swisscom, T-Systems, and the Associated Press.
Overall, Chainlink is a highly secure multi-chain platform that provides real-time on-chain services to hundreds of blockchain projects and software companies. Two of its most common features are:
- Chainlink Verified Random Function (VRF): A protocol that generates an array of random values, and a cryptographic proof of those values is specified. This functionality is mainly used by smart contracts that run DApps that rely on unexpected results.
- Chainlink Automation: Formerly known as Chainlink Keepers, it assists smart contracts with maintenance tasks such as harvesting, liquidation, re-establishment, setup costs, and risks when accessing off-chain markets.
2. Comprehensive Market Access – Best for Developers
Universal market access (UMA) is an Ethereum-based oracle that provides users with smart contract templates to create synthetic assets and financial contracts.
Synthetic financial contracts are tokenized versions of real-world products, such as derivatives, that iterate and track their performance and price using smart contracts, allowing casual investors exposure to a market with a high entry barrier.
With UMA’s easy-to-use platform, users can digitize any financial products that exist in the real world: CFDs (Contracts for Difference), commodities, and even cryptocurrencies. In this way, DeFi markets can have a broader exposure to the real world. When it comes to crypto, UMA allows users to own Bitcoin without actually holding the currency by creating a token copy of BTC or other cryptocurrencies.
UMA is open source and decentralized – all smart contracts are powered and managed by the UMA community, who use the UMA token to vote and submit proposals. Users can also earn rewards by the amount of activity they spend and the number of tokens in the protocol.
API3 A community-governed oracle that allows users and developers of blockchain applications or companies to connect their Web3 applications to the platform to receive off-chain data streams from multiple markets, including stocks, commodities, cryptocurrencies, and more.
API3 uses dAPIs, decentralized application programming interfaces, to feed data directly from first-party sources, unlike other Oracles, which use Oracle nodes as intermediaries for searching, querying, and data delivery.
Another vital feature of API3 is Airnode, which is a Web3 middleware that connects web APIs directly to any blockchain application; This allows any API to be compatible with blockchain technology.
Some of the institutions that work with API3 are Fantom, Polygon, Digital Currency Group, AllianceBlock, and more.
The API3 token powers the API3 platform, which its owners use to participate and win voting rights in the API3 DAO (Decentralized Autonomous Organization). The set of API3 tokens allows customers to offer “coverage of service” in the event of a malfunction in dAPIs, helping them mitigate risks. Not all oracles provide this feature in the event of a malfunction or unreliability of oracle nodes.
4. band protocol
band protocol BandChain is a multi-chain oracle built on Cosmos, an interoperable networking ecosystem that provides tamper-resistant data feed into smart contracts using the public blockchain, BandChain.
BandChain validators request data from other APIs or websites and relay that data to users and entities. The protocol can send data to many blockchains thanks to Cosmos’ IBC (Inter-Blockchain Communication) protocol. Users can also write their own oracle scripts to receive data streams from the real world, from multiple markets such as stocks, assets, commodities, and cryptocurrencies, to real-life events such as weather, sports, and more.
Band Protocol uses a Proof of Stake (DpoS) delegation algorithm. When smart contracts request data, the protocol chooses a random validator with a large amount of $BAND pegged to take over the task. $BAND validators must share the protocol’s inflation token before the data can be retrieved, and other validators vote on the validity of said data.
Some of the notable backers and integrations of Band Protocol are Binance, Fantom, Moonriver, and Iron Bank.
5. Nest protocol
NEST . protocol It is built on the Ethereum network and describes itself as “a truly decentralized oracle out there.”
The NEST network uses a reference system called “quote mining” to obtain accurate off-chain information, which is a straightforward process and divides network participants into three:
- Price Callers: Users or entities that pay a fee to use the NEST protocol
- Miners: bid on smart contracts
- Investigators: accept the quote
Furthermore, all developers in NEST use the NEST Probabilistic Virtual Machine (PVM), which is a type of virtual machine similar to EVM in the sense that it provides a library of basic functions for developers to aggregate as many projects and random assets, which are a running-asset chain that can Released or destroyed in response to random information flows.
The NEST token powers the NEST ecosystem and serves as an economic incentive for network participants. Miners and verifiers must subscribe to a certain amount of NEST tokens before submitting and verifying data to smart contracts.
6. XYO . network
XYO . network It is an Ethereum-based protocol that uses a network of anonymous and decentralized devices to provide accurate information about an object or a person’s geospatial location. This allows applications to perform smart contract transactions based on location confirmation.
The XYO Network uses Proof of Origin as a consensus algorithm, allowing the protocol to confirm the location of a particular person or object by collecting, verifying, and storing information based on a “restricted witness” interaction. These interactions occur between the four physical and decentralized components of XYO:
- Watchmen: Devices that act as witnesses on the site, and create ledgers to temporarily resolve inference – ways to solve problems and provide reliable results.
- Bridges: devices that interpret geospatial data and transfer information within ledgers from custodians to archivists.
- Seeers: devices that analyze inference and are rewarded for providing accurate analysis.
- Archives: Devices that store raw data from bridges and make them available to fortune tellers and are only compensated when the data is retrieved.
The XYO Network was created in 2018 along with a partnership with Spaceflight, a space transportation services provider, which used XYO hardware to report on the location of satellites. Since its launch, Oracle has partnered with several technology and software companies, including Chainlink, Microsoft, and Deo Digital.
7. iExec RLC
iExec It can be described as Amazon Web Services (AWS) for the DeFi sector. This oracle website offers a marketplace for cloud computing services that can connect Web2 business and applications to Web3.
iExec offers an easy-to-use set of APIs that even developers with little or no knowledge of the blockchain can use to build their own Oracle and run their Web3 applications.
Users can also rent their apps or datasets to other users and get rewarded for their computing services while maintaining ownership and privacy of these assets. These assets can solve specific problems in many industries, including supply chain, healthcare, B2B, and more.
WINkLink It is a straightforward and easy-to-use Oracle solution built on the TRON network. It allows users to create a custom network oracle to search and query real-world data and supply it with smart contracts. This data can range from encryption, stocks, and NFTs to weather information, sports, real estate, and more.
Taylor It is a permissionless oracle that allows DApps to access off-chain from various industries. It is built by Daxia, a derivatives platform based on Ethereum.
Tellor uses a reporting system – a system that relies on a network of reporters who search, query, verify and verify data. It has two types of data feeds; SpotPrice, which provides market data from existing APIs, and Custom Pricing, which adjusts data according to customer needs.
DIA (An acronym for Decentralized Information Assets) is a community-governed, multi-threaded oracle solution for Web3 applications. DIA is available across multiple blockchains, from Layer 1 to Layer 2, including Solana, Ethereum, Avalanche, Fantom, Arbitrum, Aurora, and Polygon.
DIA provides an enterprise-grade data feed for entities looking to track traditional and digital financial applications, such as asset prices, lending rates, metaverse data, NFTs, cryptocurrencies, and more. These data feeds are fully customizable, allowing users to create specific feeds according to their needs by configuring sources and methodologies.
Final Thoughts: Why is Oracles Blockchain so Important for Web 3?
Oracles are vital to the Web3 ecosystem as they extend the usefulness of blockchain-based applications. Without Oracle, smart contracts would have limited capabilities outside the blockchain world. One common misconception is that Oracle is a data source in its own right. This is incorrect because Oracle is the external information source and verification layer.
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