Discussion series probes the potential of UMA’s optimistic oracle
tl;dr: UMA has initiated a series of discussions on Twitter exploring questions that may be put to the optimistic oracle. This “open mic” series aims to enhance the community’s understanding of what factors others consider when determining their votes on a disputed proposal, and exploring some of the more novel use cases that an optimistic oracle can facilitate. This article reviews the main takeaways and highlights of the first four sessions in the series. Here is the series schedule. All are welcome to join.
UMA is an optimistic oracle built for Web3
Oracles are a key part of blockchain infrastructure. They enable communication between the external world and on-chain environments in a trustless manner. Unlike traditional price feed oracles, optimistic oracles like UMA can report on natural language requests, as well as directly ensure the validity of coded data feeds. Price feed oracles are limited in their applicability and rely on third party validators.
“In an era where anyone can disseminate anything as truth, the need for oracles becomes increasingly important as reliable arbiters of that truth.”
Balaji Srinivasan
This ability and flexibility of an OO expands what is possible to build in the Web3 ecosystem
These are uncharted waters. Philosophers have interrogated the nature of truth for many years, but perhaps one of the most relevant theories for Web3 is William James’s assertion that truth has a “cash value”, that true beliefs are those which are useful.
“How odd it must seem to some of you to hear me say that an idea is true so long as to believe it is profitable to our lives.”
William James
Within the UMA system, the most profitable beliefs are those which are in line with token holder consensus, thus the rational token holder should not only interrogate their own belief structure, but what they believe others believe (and even recursively what they believe others believe that others believe, that others believe…etc) in order to best identify the schelling point. And ultimate end of that recursive process in a decentralised system is the truth.
To this end, UMA has initiated a series of discussions exploring questions that may be put to the optimistic oracle with a view to enhancing the community’s understanding of what factors others consider when determining their votes on a disputed proposal, and exploring some of the more novel use cases that an optimistic oracle can facilitate.
Here’s a review that summarizes our first four sessions of the series.
Session 1 | What is the price of Bitcoin in USD?
While superficially this may appear a straightforward question, a deeper dive highlights some critical quandaries. Prices differ across exchanges, aggregators have their own internal assumptions and biases, and data availability can be an issue. In some cases, a price source may report data that the broader market believes to be incorrect, either through an error or poor aggregation.
Additionally, few trades in decentralized finance (DeFi) are made directly between Bitcoin itself and physical (or even digital) dollars, with most relying on dollar proxies such as DAI or USDC, which themselves have a dollar price.
Over specification of the data sources can increase the attack surface by highlighting where manipulation is most effective, but at the same time, if there is a very specific need to know a particular exchange rate on a particular exchange, incorporating this into the question being asked highlights that the source is integral to the question being asked.
A demand for greater precision, also increases the difficulty of schelling point identification — it is fairly trivial to identify the USD price for Bitcoin to the nearest $10k, but not very useful for most DeFi purposes.
Session 2 | Safety and ethical considerations
As Web3 grows, and automation becomes more embedded, questions of safety and ethics come to the fore. Individuals may wish not to interact with certain contracts either because of legal implications — such as the contract being sanctioned by their nation-state, or that it breaches their ethical principles, such as non-sharia compliant contracts.
UMA can be used to aid the identification of contracts that conform to particular requirements. It can also be used as a safety valve to prevent certain actions being taken when that action would breach some higher level set of safety, regulatory or ethical standards — allowing an opt-in system for those who wish to follow particular guidelines, without heavy handed intervention.
The classic 90s cyberpunk assassination market thesis was discussed with a conclusion that UMA tokenholders may decline to respond to an explicit monetising of murder, as the reputational damage to the OO may outweigh the voting rewards, thus harming overall holdings.
However, the same basic principle can be used to encourage those with power to take action, such as a politician voting in favour, or against, a particular bill, or to incentivise whistleblowers to leak public interest information, and compensate them for any monetary impact that such an action may incur.
Session 3 | Is Pluto a planet?
Scientific knowledge is a key line of inquiry, but science is often disputed and “truth” can become obscured. Some issues highlighted in this session included how reliant we are on authorities, such as NASA or the American Astronomy Association, to provide both the answer, and the framework by which it can be evaluated. Linguistic issues also came to the fore, as the definition of “a planet” has changed over time which has changed Pluto’s status, even though Pluto itself just keeps on being the same celestial body as ever; additionally the language in which the question is posed may influence the answer, if — in that language community, or linguistic schema, definitions may subtly shift meaning.
More broadly in Decentralized Science (DeSci), this discussion explored ways in which UMA could be used to verify scientific knowledge, for example by checking that citations were accurate and reflected the actual content of the cited paper.
Another potential use of UMA would be to support a prediction market that could be used to fund scientific experimentation, by using the proposer reward for a particular piece of scientific information as a bounty to encourage experimental activities to expand the field of knowledge.
Session 4 | Does Finland exist?
A popular, if quirky, conspiracy theory, that Finland doesn’t exist, led the discussion into our latest exploration into the interface between Web3 and nation states. While even the originator of the conspiracy theory concedes that Finland is indeed a bonafide nation-state, that state also includes the Sami peoples and the Forest Finns, who have a more nebulous relationship to the nation-state structure — in common with many other indigenous peoples and ethnic minorities as well as diasporic approaches to national self-determination.
While most in Web3 spend considerable time in the Ether, our corporeal existence is landlocked, and the particular piece of earth that you happen to be standing on at the time has substantial ramifications for your actions. While Bitcoin and Ethereum are often said to be “digital nations”, the implications of this are only just coming to the fore, as Web3 reaches into areas such as real estate or insurance for natural phenomena.
UMA’ s OO may potentially be used to validate supra-national identity on an opt-in basis and act as the settlement layer for real estate contracts or confirm weather events for off-chain insurance purposes.
Join us for future conversations in this series
These discussions represent “a good start” when it comes to testing the potential, the limits and the practical applications of UMA’s optimistic oracle.
Some questions appear pretty simple to answer on the surface, but as we probe beneath the layers of linguistics, power, meaning and knowledge, we find that sometimes the answers are more complicated.
This series of “open mic” conversations continue over the next several weeks as we explore how the OO would handle questions like these in its pursuit of verifying data and information, on-chain — and what protocols, tools and dapps can be built using UMA’s optimistic approach.
Please find our remaining schedule here and join us for any or all of these upcoming Twitter Spaces. All are welcome.
