Research progress in the field of Decentralized Oracles

Oracle consensus in rational environments

Oracle consensus in rational environments

The problem

As we have already seen at previous article, the VM cant access any data of the real world. Someone must inject these data. That way Decentralized applications can use the VM (smart contracts). Oracles, which usually are third party entities, bear the responsibility to inject reliable data on time. The problem is that the users have to trust the Oracle(s). This, unfortunately, makes the application to have centralization points, whichdefeats the goal of decentralization and trustlessness in the first place.

The above is called by many as “the Oracle problem”.


The solution is, when completely decentralization is in need, to have a consensus mechanism for oracles, which will guard the change of the internal state of the smart contract. This brings on the table the idea to have a second blockchain on top of the first one, which will decide if the data are correct and allow write permission on the smart contract. But this carry the case too far, raising complexity, making the Dapp very slow and much more expensive to run.

Is there a solution to solve the Oracle problem without using a second blockchain/layer? Can the problem be solved on first layer?

Our research

Our research shows that this is possible, at least on specific occasions. We have finalized and published in English a yellow paper about a mechanism which can incentivize rational oracles to be honest. This mechanism at many use cases may solve the oracle problem onchain, meaning directly on blockchain. Off course, second layer solutions are possible but we strongly prefer everything to be settled on first layer (ECOCHAIN).

Our aim is to boost the Oracle use for the whole blockchain industry. For this reason our research can apply to other blockchains. Extensive use of oracles will make the Dapps implementation possible on more occasions and will bring adoption. Also, oracles can be used for bridging blockchains. We envision a future in which cross chaining will be a common place.
The yellow paper can be found here.