In “The Matrix”, there is a prophet named the Oracle, who appears unassuming but is actually the key strategist responsible for placing the three major powers into her game. The Oracle was originally just a program in the Matrix designed solely to detect human emotions and assist in upgrading the Matrix.
The conflict between the Matrix and humans has occurred five times, with Zion being destroyed five times and the humans inside being killed five times. Surprisingly, during this process, the Oracle gradually transformed from a purely rational program into a sentient one. She had a dream of ending the war between the Matrix and the real world.
As she could foresee many things and was very kind, she became a bridge between the virtual world of the Matrix and the human world of reality.
Similarly, in the world of Web3, there is also an Oracle who plays a very important role in connecting blockchain to data and systems in the real world.
01.Why is an Oracle needed?
You may wonder why applications on the blockchain do not directly access this data, but instead require an intermediary. This is because the operational logic of the encrypted world is different and cannot be accessed directly. The data on the blockchain is achieved through a consensus mechanism, while real-world data is not always the result of consensus. A reliable Oracle is needed to connect the two worlds. By providing trustworthy data, Oracle converts it into data that can be read and used on blockchain.
Taking prices as an example, the essence of price on the chain is not to “upload” price information to the chain, but to generate a price fact on the chain.
Most DeFi projects require an Oracle, and their ecosystems rely on Oracles to connect on-chain DeFi smart contracts to off-chain data sources to obtain data such as commodity and cryptocurrency prices, enabling data interaction between the blockchain world and the real world. Therefore, the more prosperous the DeFi market is, the more critical the Oracle is for its smart contract projects.
In addition, in various scenarios such as insurance, finance, random prediction, and the Internet of Things, Oracles have already demonstrated their irreplaceable value in blockchain as an extension of tentacles, building a trusted bridge between on-chain and off-chain, constructing a mutually integrated value ecosystem.
Project parties need to pay for every information query and data call. In simple terms, the Oracle is like a bridge and bond that connects the DeFi world to the real world, ultimately ensuring its security and interoperability.
02.What are the different types of oracle?
Oracles provide additional functionality to smart contracts by providing a way to communicate outside the decentralized blockchain network. There are several types of blockchain oracles, including but not limited to:
• Software Oracle
A software oracle connects to the internet and can access and transmit data and information from any third-party server or website, such as commodity prices, weather indices, flight numbers, etc., in real-time, and write them into smart contracts.
• Hardware Oracle
Hardware oracles are widely used in IoT as electronic sensors and data collectors. They convert physical events into digital values so that smart contracts can understand them. Examples of hardware oracles include barcode scanners, bank card POS terminals, and medical devices that collect various medical data.
• Centralized Oracle
A centralized oracle is a single-source oracle that is typically provided by a trusted third party such as the government or a reputable company. It prevents data tampering and loss by separating data from untrusted operating systems on local devices. However, a single centralized data source also brings potential risks to smart contracts.
• Decentralized Oracle
A decentralized oracle is a consensus oracle with a distributed consensus mechanism. It obtains data from multiple external sources rather than a single one, making it more reliable and trustworthy.
Compared to centralized oracles, although decentralized oracles may have lower operational efficiency, they solve the problem of single node failure, making the possibility of security risks smaller. Due to concerns about risk, most DeFi applications prefer to run on decentralized oracles.
03.PlugChain: The Decentralized Oracle Leader
As a middleware, an oracle provides infrastructure-level services to applications, bridging the closed on-chain data with countless types of off-chain data sources in the real world. These data sources power global finance, technology, commerce, and trade. In the future, these data inputs may all be connected to the blockchain in some way.
Here, we will focus on PlugChain’s oracle network.
Firstly, PlugChain is a decentralized oracle solution, mainly providing assistance to smart contracts in accessing critical off-chain resources, and providing external data to smart contracts.
We know that centralized oracles are responsible for data acquisition on a single machine and require the introduction of third-party trusted institutions. Decentralized oracles, on the other hand, operate in parallel across multiple machines and ensure consistency through mutual verification. Therefore, centralized oracles are suitable for scenarios with high real-time requirements and high trustworthiness, with a better user experience, while decentralized oracles are the opposite. However, since PlugChain is a distributed data network, it can avoid the problem of a single point of failure.
Like Chainlink, PlugChain also uses the method of “feeding data” to the on-chain contract to upload off-chain data (prices) to the chain for other contracts to call. Therefore, the validation of data on PlugChain is not direct, but indirectly ensures the authenticity and effectiveness of the data through verification of the uploader (reputation node).
Interestingly, PlugChain aggregates data from multiple of its own mainnet nodes and data sources, verifies the aggregated data, and transmits the verified data to the smart contract to trigger contract execution, thereby avoiding centralization risks throughout the process. The benefit of this approach is that the cost of obtaining data is relatively lower, the frequency of data provided is higher, and performance is better.
In addition, PlugChain effectively combines cross-chain and oracle technology to create the industry’s first aggregated cross-chain oracle protocol. This not only enhances the liquidity of Web3 protocols but also helps to suppress competition and tribalism among various blockchain communities and incentivizes productive collaboration. At the same time, the PlugChain cross-chain oracle monitors the activities of various blockchains and reports the situation to other blockchains or cross-chain bridges. This allows a native cryptographic asset of one blockchain to be traded on other blockchains through cross-chain bridges. Additionally, PlugChain’s oracle can also prevent double-spending or other manipulative activities from occurring.
If only these were said, it would not be enough to make PlugChain the leader in decentralized oracle. The embedded on-chain AI system is the important factor that sets PlugChain apart from the competition in this field. With intelligent technology, PlugChain extracts the potential value of data, linking the relationship between different Web3.0 application scenarios, extracting deep knowledge hidden behind information, refining sample features contained in data, depicting the distribution pattern of on-chain data in high-dimensional space and analyzing it. PlugChain’s on-chain AI system marks the source, location, exchange method, and “ecosystem scenario” status for each “piece” of data. Therefore, upper-layer algorithms or applications can not only quickly find the required data but also know at any time how to use it and whether it is available. In the data asset map on PlugChain, every piece of data is “alive” and valuable.
Oracle + AI is the new paradigm for PlugChain’s oracle narrative, and also its trump card!
In conclusion, in terms of technology, oracle expands the Web3 technology stack, transmitting off-chain data and services to promote smart contract innovation; achieving cross-chain interoperability to ensure seamless connection of various blockchains. As a segmented public chain focusing on aggregated cross-chain oracle, PlugChain’s infrastructure also provides an entry point for Web 2.0 backend systems to enter the Web3 world, providing an abstraction layer for traditional systems to easily connect to any public chain, bringing decentralized computing and encryption protection to traditional systems!
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