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Background
Why We Need Better Data Infrastructure?
About DeFi
Finance is always one of the most practical application scenarios, and there is no exception in the blockchain industry. DeFi (Decentralized Finance) is a representative of blockchain finance. It mainly refers to decentralized lending, that is, digital currency users can mortgage their digital currency to the DeFi platform to obtain interest, and they can also borrow from the DeFi platform, which is one of the few bright spots on-chain in recent years.
Yet, at the bottom of every DeFi protocol, there is a logic hole that could completely blow up the contract at some time in the future. Finance is price based transactions. We need correct prices for every trade, every position we create, and liquidate. A smart contract is not smart unless you get the input right. Oracle becomes the next most critical infrastructure piece before DeFi can grow from an experiment to compete and eat the traditional finance world.
About Web3.0
Although the definition of web 3.0 varies from person to person, it all begins with a movement away from the centralization of services like search engines, social media, and chat applications that are dependent on a single organization to function, which can be easily abused as countless cases demonstrate.
The internet today has been transformed into a top-down system or surveillance capitalism dominated by a few big players whose power is derived from their control over your data.
The web 3.0 initiatives advocate the possibility of data being returned to the control of the people who generate it. It is considered as a move that is going to reverse the current information and social dilemmas we are faced with and create a more frictionless and humane virtual economy.
Polkadot is an open-source project led by the Web3 Foundation. It is a sharded protocol that connects different blockchain networks.
Polkadot
Polkadot consists of two parts: Relaychain and Parachain.
- Relaychain: This is the core of Polkadot which is responsible for network security, consensus, and cross-chain interoperability.
- Parachain: These are sovereign blockchains with custom tokens and optimized functionality for specific use cases. Parachain connection to Relaychain is priced on a pay-as-you-go basis or a continuous connectivity lease.
Substrate
Substrate comes with everything you need to build your blockchain. Use Substrate’s pallets to easily create what you want, or craft your own custom logic. Either way, Substrate makes building a blockchain far faster, easier, and safer than ever before.
About Oracle
Oracle is the system that provides an out-of-chain data source for in-chain smart contracts. The word oracle comes from Greek mythology, representing the people who can communicate with gods, and see the future vision. In the context of blockchain, oracle is the system that can answer the external problems of blockchain and the bridge connecting in-chain and out-of-chain data. In ideal conditions, oracle is a free-of-trust system, which means that they do not need to be trusted as they operate according to the principle of decentralization.
There has been a wave of projects trying to solve this problem. Most of them get price feeds from external data sources such as centralized exchanges through trusted nodes, then data is uploaded to blockchain to be used by different DeFi protocols. There is one fundamental issue of this solution is that price data has not been effectively verified. While some other DeFi protocols get their price feeds from decentralized exchanges. The problem here is that these prices can be easily manipulated due to low transaction volumes. Blockchain empowered smart contracts are isolated from the internet world and cannot access external data directly. Computation within the smart contract is also excessively expensive and limited by resource capacity.
The ideal oracle that works for DeFi should include the following characteristics:
- Accuracy: The prices can accurately reflect market prices.
- Timeliness: The prices can react quickly to the changes in market prices.
- Cost of Attack: Cost of manipulating the prices is extremely high.
- Decentralization: The price is generated and verified in a decentralized and permissionless system.
Project
Description
Chainlink is a decentralized network that provides information (oracles) to smart contracts, aims to solve the problem of off-chain information sourcing by smart contracts for their execution parameters.
Band Protocol offers a decentralized data oracle by making data readily available to be queried on-chain, using a delegated proof of stake ("dPoS") to ensure data integrity.
NEST oracles solve the problem of the on-chain price through decentralized incentive schemes, that is, price oracles.
Tellor is a decentralized oracle on Ethereum enabling censorship-resistant access to off-chain data.
DOS Network is a decentralized oracle service supporting multiple heterogeneous blockchains.
About Data Infrastructure
Data Economy is a trillion dollar business. Nevertheless, Oracle is just one part of the data infrastructure in blockchain industry. Data is essential for the modern age. It is the infrastructure underlies the whole economy. It underpins public service transformation, business innovation and democratic engagement. It connects multiple sectors necessary for a functional society. Data infrastructure includes technology, processes and organizations. Data infrastructures like our road infrastructures: roads help you get from A to B – data helps you get to a decision.
Unfortunately the blockchain industry, a data driven industry, is seriously lacking of a data infrastructure because the blockchain industry is still in its embryonic stage and does not have a standardized protocol for data needs thus creating some insuperable hurdles in creating a data infrastructure that works for all sectors.
Project
Description
The Graph is an indexing protocol for querying networks like Ethereum and IPFS. Anyone can build and publish open APIs, called subgraphs, making data easily accessible.
Covalent provides a unified API to bring full transparency and visibility to assets across all blockchain networks.
Ocean Protocol helps developers build marketplaces and other apps to privately & securely publish, exchange, and consume data.
Dune Analytics allows users to instantly create and share analysis of Ethereum data.
Infura's development suite provides instant, scalable API access to the Ethereum and IPFS networks.
Subscan is a blockchain explorer built for Substrate based networks.
Last modified 1yr ago