Oracle

Published:

A blockchain oracle serves as a bridge between a deterministic blockchain environment and the external, off-chain world. Smart contracts are inherently limited in their ability to access real-world data. They cannot, for example, directly fetch information like current weather conditions, stock prices, or the outcome of a sports event.

Oracles are trusted third-party services or decentralized networks that find, verify, and feed external information to smart contracts, enabling them to execute based on real-world inputs and outputs. For instance, a decentralized insurance application might use an oracle to retrieve flight delay information to automatically trigger a payout. Oracles can provide various types of data, including price feeds, weather data, or random numbers. The reliability and security of an oracle are paramount, as the smart contract’s execution depends on the accuracy of the data provided.

Different oracle designs exist, including centralized and decentralized versions, each with its own mechanisms for ensuring data integrity and trustworthiness, aiming to solve the “oracle problem” of securely bringing off-chain data on-chain.

 

Follow us on Facebook and LinkedIn to keep abreast of our latest news and articles