What is Oracle?
The paper published by Dr. Xu Zhong at the Financial Research Institute of the Central Bank: “What Blockchains Can and Can’t Do?”:
The mechanism for inputting non-blockchain information into the blockchain is generally called the oracle (oracle mechanism)
In short, the oracle is the bridge between the blockchain and the real world for data interaction.
If the DApp is an App, the oracle is the medium that allows the data to be trusted to communicate between the App and the real world. We will share the experience of technology and applications with you in three issues:
1. Why do channels need to be trusted?
2. How to ensure the credibility of this data channel?
3. How are trusted data channels applied?
Use of the oracle
Using an oracle as the medium of a trusted data source of communication between Apps and the real world can facilitate the broad demand for large-scale platforms in big data, insurance, sports quiz, and decentralized finance.
Big data and insurance
In the current insurance claims process, there are often high probabilities of rejection of claims. The formulation of rules and enforcement of compensation are mainly formulated, promulgated and modified by insurance companies, and there is a lack of third parties to ensure fairness. In addition, the strong position occupied by insurance companies when making payments, as well as some inevitable subjective factors, lead to “easy insurance and difficult claims settlement”.
The use of blockchain in big data insurance is imperative. Through blockchain smart contracts, the underwriting process, management efficiency, and automatic compensation can be improved, effectively reducing the operating space and opportunities of insurance companies for non-compliance claim/rejection. Reinventing trust among insurance companies and consumers.
How to make the claim information efficient and accurate to the contract and timely issue insurance premium.
Sports and E-sports industry
Between 2018 and 2022, sports betting will grow by 8.62%.
For the E-sports industry, the annual growth rate is 13.5%, which is expected to reach $ 129 billion in 2020.
The results of the sports betting industry needs to trigger smart contracts and initiate actions in a credible way. How to ensure the match results and support that is truly and effectively passed to the trusted oracle will be a bottleneck restricting the greater development of the betting industry.
Decentralized finance (DeFi)
Value interoperability and value fusion are very important points of the blockchain. The most important role of DeFi, will come from Digital Currency Electronic Payment (DCEP) China’s national digital currency will serve as an important secure, high-credit digital currency. It will have an important impact on the current digital currency /stable currency system, and it will have a great impact on blockchain finance based on stable coins, which may further promote the development of decentralized finance (DeFi).
DeFi’s “troika” includes decentralized exchanges, lending products, and stablecoin projects, all of which require stable and reliable data sources to be efficiently submitted to the chain.
Dilemmas and risks
In June 25, 2019, Synthetix suffered an Oracle attack, in which an error in the Oracle system caused around 37 million ETH to be siphoned off by an exchange trading BOT.
Synthetix uses the oracle to obtain the prices of foreign exchange, commodities and cryptocurrencies from only 2 commercial APIs. After the integration, as the final result, the price of KRW is provided by only two APIs, and one of the APIs reported an incorrect KRW price intermittently. (1000 times of the correct price), thus causing the oracle obtaining the price data from the APIs taking an incorrect average value and reporting the wrong price to the platform’s exchange rate contract.
There are currently two decentralized oracle machines on the market, or at least two that can be considered most representative which are Chainlink and DOS Network. The two projects have their own advantages and disadvantages and solve the oracle problem in different ways.
ChainLink and Oraclized choose the choice of authoritative data sources + trusted data
However, since Zuckerberg apologized in 2018 for Facebook’s sale of 50 million Facebook user information to data analysis company Cambridge Analytical, our restraint on big companies can only depend on reputation and internal whistleblower reports.
Facebook’s reputation loss also caused Libra’s credibility at U.S. Hearing. The current predicament is data as value. Centralized platforms even have ulterior motives for stock prices and good financial statements. They will have more or less motivation to do evil for profit.
How to make the value of data better and more intelligently allocate users, data providers and risk controllers, and other token holders is a question we need to consider.
BOS Oracle system came into being
Centralization will bring motivation for evil, decentralization will have design difficulties and efficiency, how to reasonably motivate and punish each participant in the oracle system will be a very worthy question.
BOSCore uses positive incentives, and a complete game-theory model balances changes in efficiency and market relationships.
And providing four different ways to transfer data, and input the data on the chain:
1. The data provider firstly writes data to the chain, and the user reads it;
2. The data provider monitors to the call event and actively pushes data to the user on the chain;
3. The data provider monitors to the call event, and actively pushes data to the off-chain consumer;
4. Complete data interaction off-chain, signature ensures data reliability.
How to design the participants in the oracle ecology, how to restrict, how to motivate, how to do a good job of risk prevention and control, how to ensure the credibility of the data, etc. The following content will be developed and shared with everyone along with data samples and product demonstrations.