Algoracle, the first decentralized oracle network on the Algorand blockchain, provides data so that dApps can build smart contracts for DeFi and other purposes.
Over the past decade, a major fundamental shift has occurred with Data. According to the Wharton Business School, 50% of the top 10 companies are data-based platforms — Amazon, Google, Facebook, Alibaba, — data has become the oil that fuels major networks around the globe. Through the commercialization of the internet, data has become such an essential force that it has been labeled as the “new currency.” Data has become extremely important for businesses to embrace as an opportunity to grow their operations. Over the past 2 years, decentralized finance (DeFi) is creating a new alternative to traditional banking, that features an open, trustless protocol that has reached over 100 Billion in total value which is more than many countries GDP.
These decentralized applications (dApps) have a unique ecosystem that contains numerous limbs, which allows for anyone around the globe to participate in permission-less saving, lending, borrowing, trading of digital assets – by simply connecting to a digital wallet and the internet. All these De-Fi features are done with the absence of an authoritative figure facilitating every transaction. It was the creation of the Ethereum blockchain smart contracts which are self-executing agreements that eliminate the need for a third party, that has opened up an entirely new world of agreement protocols and without any smart contracts, there would be no DeFi.
Data is the most vital element that smart contracts use and oracles are the source that distributes the data into the smart contracts so they can automatically function. Oracles are the backbone of the entire De-Fi infrastructure.
Whether it’s trading crypto, algorithmic stablecoins, liquidity aggregators, lending markets, De-Fi consistently needs assistance from oracles. Oracles act as a bridge that digests external information into formats that the smart contracts can comprehend which becomes a vital resource to the native blockchains. Examples of data gathered by oracles comprise the following: price and exchange rate of real/crypto-assets; weather conditions; sporting events and geolocation and traceability information.
If the blockchains didn’t use oracles, the blockchains would be like having a cell phone without having the phone connected to a cell phone provider, and you would not be able to connect on multiple fronts. Oracles allow for enclosed networks to consume and provide reliable external information, allowing for smart contracts to react to real-world events and integrate with established business processes. When bundled together, the collection of real-world events forms data in which that data is fed into the smart contract networks.
For example, let’s examine one of the biggest protocols on DeFi which is the trading of crypto assets. DeFi apps rely on accurate, real-time crypto pricing data to be displayed every time a retailer utilizes the app for their trades. This allows for better continuity in hopes to create favorable trading results. When the retailer analyzes the trade pricing they are fully trusting the app to provide the most accurate real-time pricing data. This is where Algoracle helps benefit dApps, as it introduces real-time pricing data while providing more data innovation as a unique abstraction layer decentralized oracle network that is built on the Algorand Blockchain
With Algoracle, real-world data is kept up-to-date and accurate on a smart chain contract with the minimum amount of infrastructure (enough to move data and secure the network).
It enables universally connected decentralized node networks to securely interact as independent sources to provide critical off-chain, real-time external data feeds needed by complex smart contracts to become a strong form of digital agreement. Real-time network exchanges include accurate and up-to-date sports, weather, and crypto pricing data to complete smart chain contracts.
The Algoracle Network is driven by a large, secure, open-source community of node operators and feed providers who facilitate trusted, independent and real-time data feeds. The network has several layers of security mechanisms, verified by researchers, security auditors, and community bounty hunters.
Algoracle’s winning formula focuses on establishing decentralized participation which is guaranteed for all independent node operators and users looking to contribute to the network for economic stimulation. Algoracle focuses on keeping trusted, accurate, and up-to-date real-world data on a smart chain contract with as little infrastructure as possible. To ensure the network is fully decentralized, Algoracle focuses on keeping the collection and aggregation mechanisms as decentralized as possible.
To better explain how Algoracle’s proposed architecture will work, we start with the different stakeholders of the system and its components.
1. Feed providers (FPs)
As the backbone of Algoracle, Feed Providers (FPs) play a vital role. They provide data that comes from ideally trusted sources off-chain. Algoracle makes it easy for FPs to contribute to the system. They simply need to input their API endpoint and respond to verified nodes with their values (Vs).
2. Node runners (NRs)
Node runners (NRs) communicate with feed providers via APIs. As part of the cryptographic sortition protocol, each cluster of nodes chooses members to be eligible for proposing, voting, and certifying the next value to be added to the feed smart contract (FSC). In addition to aggregating the data, NRs can also provide raw values to smart contracts reading the data to aggregate themselves.
3. Feed Consumers (FC)
Feed consumers (FCs) are the smart contracts that will be using the Vs submitted by FPs. FCs simply call the FSC in the time interval they wish, pay the required fee, and get the data from the contract’s global state.
4. Algoracle Community (AC)
The general public (AC) can view live feeds and report poor quality or malicious FPs to get bounties. Participants are also able to vote on previous reports, and once certain thresholds have been met, individuals who voted and reported receive bounties for correct reports (or lose their stake for incorrect reports).
Algoracle aims to be selected as one of the core methods for dApps to utilize accurate, up-to-date real-time data to further decentralize their operations. To become one of the dominant open-source oracle networks on blockchain in the decentralized data processing ecosystem, Algoracle seeks to build trusted partners within its network.
Oracles are important in enabling a new generation of use cases. Here are just 5 ways Goracle can make this happen.
Algorand-based Decentralized oracle network, Goracle has announced a technical partnership with Kleros, the dispute resolution protocol. The goal of the partnership is to help resolve disputes that arise on Algorand blockchain.