Kylin Network — The Polkadot Oracle In The New Era
DeFi refers to “decentralized finance”. In the world of blockchain, it is also called open finance. Its goal is to subvert the traditional financial service system and promote the arrival of a new era of digital economy, so that everyone can obtain great economic freedom. It can be said that the emergence of DeFi is a perfect integration of decentralized technology (blockchain) and the modern financial industry. it has spawned a series of innovative applications in many traditional scenarios such as securities trading, lending, and insurance, and has triggered the craze in the crypto world.
1. DeFi and oracle pain points
Decentralized finance(DeFi) and the decentralized lending services it contains are widely used and hyped in the world of encrypted assets. However, every underlying protocol of decentralized finance requires asset prices for operation and guidance. The correctness of the price has become the decisive factor for the smooth operation of the entire financial system, and the oracle is the key to providing price input data for the DeFi system.
The function of the oracle is a means to provide off-chain data for on-chain smart contracts. Under ideal circumstances, the oracle should be a trustless system, as long as it can operate normally according to specific decentralization principles. At the same time, the oracle needs to have the following four 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
However, for the oracle existing projects, it is difficult to solve all the four issues above whether using Chainlink, Augur or Gnosis. The oracle system Kylin Oracle built on the Polkadot network will solve the pain points of DeFi and oracle projects through its own unique design concept and operating mechanism, and provide real-time market data and social data for participants in the decentralized network.
2. What is Kylin?
Kylin Oracle is a universal oracle protocol. Its main function is to build an on-chain data warehouse through decentralization and trustlessness, and to provide accurate social data and market data to various DeFi applications and blockchain projects.
Kylin Oracle is characterized by providing reliable, efficient and trustless solutions for the off-chain data application. Kylin Oracle, which is built on Substrate, will be connected to the Polkadot ecosystem in a parachain, sharing the underlying consensus of the Polkadot, operating in a fully decentralized and highly scalable manner, and ensuring the security and network performance of the protocol.
Kylin Oracle encompasses 5 entities, including Data Consumer, Data Warehouse, Oracle Node, Arbitration Node and Blockchain Node. These five entities represent the major components of Kylin’s architecture. The details and the relationships, represented by the arrows, wit one another is as follows:
As shown in the figure, five roles form a data request model in Kylin Oracle:
- The data request is generated by the data consumer, which is uploaded to the data warehouse through on-chain transactions, and the Oracle Node is encouraged to process the required data through incentives
- After receiving the service fee paid by the data user through KYL, the data warehouse locates the data user by tracking the on-chain transaction, and then broadcasts to the off-chain oracle network
- The oracle node transmits the data it has discovered and the proof of calculation to the Arbitration Node. When the data meets the arbitration standard, it will be transmitted to the data warehouse. The data warehouse stores the data and pays tokens to the oracle nodes which provide the data
In order to solve the privacy and security issues of the oracle network, Kylin Oracle introduced Kylin Oracle Transport Access Control (KTAC) and Kylin Oracle Real-time Transport Protocol(KRTP) technology to solve similar problems. Among them, KTAC technology is implemented using software application library endpoints, including to provide participants with non-connected permissions and confidential control to ensure personal privacy, modular and easily auditable consensus protocol. KRTP is based on the improvement of the real-time transmission protocol to ensure the security and verifiability of information transmission.
3. Kylin Token Economics
Kylin Oracle designed a unique economic incentive model to ensure fair distribution of benefits among participants.
- The oracle node and the arbitration node need to stake KYL: the more KYL staked, the more data requests will be allocated, and underperforming or malicious actors will lead to the reduction of their staked tokens
- Token is the main intermediary of transaction behavior: KYL tokens will be used to pay as a transaction, query fee, and dedicated API access fee
- On-chain governance: KYL Token holders are able to vote for the protocol upgrades and parameter changes on Kylin Network to ensure that the oracle network realizes a truly decentralized decision-making power.
At the same time, Kylin Network introduced two functional designs: Verifiable Random Function (VRF) and Optimal Ranking Zone Model (ORZ). The former requires that different data requests will be assigned to different collaborative groups to ensure the fairness and effectiveness of data processing, and to ensure the decentralized characteristics of the entire system operation; the latter uses the jump ranking weighting algorithm to replace the weighted average to calculate the staking share of tokens to avoid the oligopoly caused by the concentrated holding of KYL by large households.
Finally, in order to ensure the authenticity and availability of data, Kylin Oracle has designed a unique challenge mechanism. Any validator can challenge existing inactive miners by staking tokens. The challenger needs to stake 1.2 times KYL of the challenged. Once the challenge is successful, the challenger will be rewarded with 20% KYL slashed from the staking of challenged. If the challenge fails, the challenger’s staked KYL will be directly burnt. The authenticity standard of the data is that the price data provided by the verifier does not deviate from the real-time price at the time of quotation by 5%.
4. Kylin’s application and vision
Kylin Oracle mainly has the following six application scenarios:
Decentralized insurance automatic payment
The decentralized insurance platform can obtain various on-chain and off-chain data by connecting to the Kylin oracle machine to complete the judgment and automatic payment of insurance activities.
Stable coins and crypto derivatives
Stablecoins and encrypted derivatives need to frequently obtain off-chain real-time price data. Kylin Network can obtain reliable data in multiple scenarios in real time and efficiently.
Crypto asset lending platform
Kylin Oracle can provide off-chain information including real-time and reliable currency prices, interest rate levels, and borrowers’ social information to the on-chain lending platform
Cross-chain decentralized exchange
The lightweight Kylin Network interface that can be deployed on multiple chains provides the possibility for decentralized exchanges to realize cross-chain atomic transactions.
Decentralized casinos and games
Kylin Network random number engine provides unpredictable and verifiable random number generation.
Blockchain computing market
Commercial computing such as machine learning training models and 3D rendering needs to complete a variety of complex computing tasks. Kylin Oracle serves as a bridge to provide verifiable and unlimited off-chain computing functions for the blockchain computing market.
Kylin Oracle built through the Polkadot network will superimpose a unique token economic model and governance mechanism by utilizing the characteristics of Substrate to solve current project pain points and effectively improve the existing oracle ecosystem.
About Kylin Network
Kylin Network aims to build a cross-chain platform powering the data economy on Polkadot. It will be the data infrastructure for the future DeFi and Web 3.0 powered by Polkadot. Kylin Network hopes to provide valid, reliable, secure, cost effective and easily-coordinated data sources and data analytics.
Contact Kylin Network
Telegram: https://t.me/KylinOfficial
Twitter: https://twitter.com/Kylin_Network
Discord: https://discord.gg/PwYCssr
Medium: https://medium.com/kylin-network
Linkedin: https://www.linkedin.com/company/kylinnetwork
Official website: https://kylin.network/
