Have you ever understood the word Oracle? It can be translated as "oracle, prophet, prophecy" and was originally derived from ancient Greek religions. Coincidentally, in the late Shang Dynasty of China, the royal family called the text of divination on animal bones or turtle shells oracle bone script, and oracle bone script was also translated into English as Oracle bone script.
Oracle's Chinese means prophet, prophet. One of its definitions is a person or thing that has absolute authority or can provide guidance in some aspect.
Graph source network
The conceptual source of the oracle
When it comes to oracles, there are still many people outside the industry who are confused about what can predict the market artifact. What is a oracle? From Baidu Encyclopedia, you can see such a note: Oracle machine, also known as oracle machine, is an abstract computer used to study decisive problems. It can be thought of as a Turing machine with more black boxes (prophets), which function to answer specific problems within a single operation. In short, a oracle is a one-way digital proxy that finds and verifies real-world data and delivers the information to smart contracts in an encrypted way. In layman's terms, the oracle is like a third-party data broker in the blockchain world.
Oracle: Be a prophet on the blockchain
Why does blockchain need a oracle? Because the oracle can help the traditional information system to be more efficient and secure in the process of docking with the blockchain. It is also because smart contracts and decentralized applications (Dapps) on the blockchain have interactive needs for external data.
Blockchain is a deterministic, closed system, and smart contracts running on the blockchain cannot obtain data directly from the outside, and can only perform tasks in a closed, isolated environment. The oracle is a tool that can truly input off-chain data into the chain to ensure the authenticity of the data on the chain.
Oracles can obtain a variety of off-chain information
Oracle provides information services for smart contracts, including but not limited to race results, aircraft delay information, etc. Since the smart contract itself is not "smart" and there is no way to automatically execute, there are great restrictions on the data source of relying on the smart contract platform to build decentralized applications. When the trigger conditions of a smart contract depend on information outside the blockchain, this information needs to be written to the blockchain record first. At this point, oracles are needed to provide information outside the blockchain.
Oracle classification
From the perspective of centralization and decentralization, oracles can be classified into three categories: centralized oracles, such as Provable; trusted alliance oracles, such as Maker DAO's OSM; decentralized oracles, such as ChainLink, Tellorr, Band, Augur, UMA. At present, the oracle service of the domain adopts the Chainlink model.
Application scenarios of oracles
All blockchain applications that need to interact with off-chain data need to use oracles, typical application scenarios are:
1) Crypto asset derivatives trading platform
2) Stable tokens for decentralized operation
3) Insurance applications
4) Decentralized forecast market
5) Blockchain-based IoT applications
Domain-based oracle application scenarios
Considering the performance of the blockchain and the security and privacy protection of data storage, the agricultural and rural data of multiple systems, platforms and institutions linked by the existing agricultural blockchain platform is basically in the form of data encryption after hash digest on-chain depository, and the original data is still stored in the database of the off-chain world, and if you want to achieve the sharing and in-depth application of these data, you need oracle services to open up the on-chain and off-chain worlds.
Domain-based oracles are a highly secure and flexible infrastructure. Reliable, tamper-proof inputs and outputs can be provided for smart contracts on any blockchain, connecting smart contracts to the real world.
epilogue
With the popularity of the DeFi concept, the large-scale application of oracles in games, Internet of Things, and financial scenarios has made it a new track in the industry. However, the oracle is still in the early stages of development. There are still some problems in the field of oracles, and they still need to be continuously adjusted and improved through practice. In particular, it should be noted that the oracle's data source is relatively single, the oracle's economic model has not been verified, and the oracle is limited by the performance of the blockchain in which it is located.
With the certification of the echelons of governments and the recognition of the world, the future application scenarios of blockchain will be unimaginably vast, and the oracle is a necessary tool for the landing of the blockchain, and the value in it will also be unimaginable, and there is an incomparably huge market space waiting to be mined.
Reference Articles:
Oracle: The Bridge Between Blockchain and the Outside World - Blockchain Technology Citation Volume 15 Author Token Communication Research