DeFi and decentralized applications wouldn’t be possible without blockchain oracles–key components of blockchain infrastructure that enable accessing, processing, and transmitting information between the outside world of off-chain data and smart contracts.
That said, what are the major engineering challenges when it comes to building resilient and reliable blockchain oracles, and why are decentralized data pipelines so important?
CryptoSlate talked to some of the prominent experts on the subject– some of whom are going to meet in Berlin this June at the world’s first technologically agnostic summit that’s fully focused on oracles.
Oracle resilience and reliability
“Companies optimize for efficiency, while DAOs optimize for resilience. With that in mind, the infrastructure that DAOs depend on needs to be resilient and decentralized, and that’s where oracles come in,” noted Niklas Kunkel, Oracle Core Unit Facilitator at MakerDAO.
This is particularly the case in regards to data, according to Kunkel, who continued to explain the importance of ensuring oracle reliability–using Maker as an example. He then further elaborated:
“What information does Maker need from the outside world? Maker gives loans and people put up collateral to take those loans, so Maker, being a decentralized bank, needs to know what is the price of all of this collateral–what is the price of Ethereum, what is the price of Bitcoin, what is the price of a bundle of mortgage loans–that’s all the information that doesn’t exist within the crypto network and we need to bring it from the outside world,”
But what makes oracles so special? And how do they align with unique constraints in the blockchain world?
“You don’t want to have to trust any other party, you don’t want to have to be at the mercy of any centralized point of failure, you don’t want anyone to be able to flip a switch and censor you, and just cut off the data,” Kunkel added, as he continued to…
