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The Web3 Data Chasm
Blockchains are designed to maintain truth inside of its often deterministic walled garden. This is where its security strength lies, in its isolation. However, the applications of this technology extend beyond tokens, price feeds, and decentralized finance, aka DeFi. The myriad of possibilities for the web3 technology is suffocated because data, which is like oxygen to computer network systems, are fenced out. Some of these problems due to the nature of blockchain technology include;
Inaccessible / Expensive Off-chain Data Querying Services & Analytics Technical overhead and network costs are heavy limiting factors for the oracles which have been built on Ethereum. They limit the use cases of oracles because the running cost far outweighs all of its benefits, shortening its scope. This explains why most Oracles applications fall to DeFi and exchange price feeds. Other types of data feeds are strangled even before they find good use and are rendered inaccessible for potentially transforming use cases just because the cost may not be worth it.
Chain-Specific & Unscalable Data Feeds When the cost hurdle is scaled, it would be of great economic benefit if one validated Data feed could be streamed across chains, i.e, in terms of being a chain-agnostic feed. However, present data feeds are mostly single-chain compatible, given the nature of the blockchain on which the solution was built, which also affects its performance in handling queries.
Centralized Data Feeding Oracles This is the central topic of the oracle problem. The aim of distributed systems is entirely defeated if they eventually rely on centralized sources for their data. However, this is the case today. “Decentralized” networks of oracles are usually controlled by a central authority capable of influencing the decisions of the network of oracles and the data feed, or they are somewhat dependent on one another. It’s not unheard of to see DeFi protocols fetching price feeds from centralized exchanges which are, unknown to them, dependent on one another via API’s.
Non-synergistic Middleware Data Framework Web3 technology development presents a lot of opportunities. As such, several companies are racing to deploy solutions to solve one problem or the other, sadly without coordination and standards. Hence, these solutions that solve different pieces of the puzzle do not come with fitting edges to frictionlessly integrate or synergize with solutions before the subsequent ones. They usually do not take the form of money legos as DeFi is now commonly referred to because of their compatibility. This slows down the collective development of this web iteration towards the majority adoption point.
Dev-Unfriendly Data Validation Layer Not only does the present solution suffer compatibility issues, but working with them to build dApps is not as easy. Web3 middleware implementation already has some level of difficulty, and not many builders can work with integrating them into their project even when necessary. The required level of abstraction to level the playing field for developers to jump in, implement and build amazing real-world solutions.