Blockchain oracle: Difference between revisions
correct that this does not belong, though |
kept the notification about there being not enough resources, but put references back because there is simply nothing more relievable available on this topic. All the sites listed are educational resources. This is very modern technology so including only academic papers is not possible. Tag: Reverted |
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{{more citations needed|date=March 2021}} |
{{more citations needed|date=March 2021}} |
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{{Original research|date=May 2021}} |
{{Original research|date=May 2021}} |
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| ⚫ | A '''[[blockchain]] oracle''' is a third-party service that connects [[smart contracts]] with the outside world, primarily to feed information in from the world, but also the reverse. Information from the world encapsulates multiple sources, so that [[Decentralization|decentralized]] knowledge is obtained. Oracles provide a way for the decentralized [[Web3]] ecosystem to access existing data sources, legacy systems, and advanced computations. Decentralized oracle networks (DONs) enable the creation of hybrid [[smart contract]]s, where on-chain code and off-chain infrastructure are combined to support advanced [[decentralized application]]s (dApps) that react to real-world events and interoperate with traditional systems.<ref>{{cite web |title=A systematic literature review of blockchain-based applications: Current status, classification and open issues|url=https://www.sciencedirect.com/science/article/pii/S0736585318306324 |date=March 2019 |website=ScienceDirect}}</ref> |
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| ⚫ | A '''[[blockchain]] oracle''' is a third-party service that connects [[smart contracts]] with the outside world, primarily to feed information in from the world, but also the reverse. Information from the world encapsulates multiple sources, so that [[Decentralization|decentralized]] knowledge is obtained. Oracles provide a way for the decentralized [[Web3]] ecosystem to access existing data sources, legacy systems, and advanced computations. Decentralized oracle networks (DONs) enable the creation of hybrid [[smart contract]]s, where on-chain code and off-chain infrastructure are combined to support advanced [[decentralized application]]s (dApps) that react to real-world events and interoperate with traditional systems. |
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== Examples == |
== Examples == |
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Many [[Ethereum]] applications use oracles. For example, [[prediction market]] [[Augur (software)|Augur]] would use election data to settle corresponding bets. |
Many [[Ethereum]] applications use oracles. For example, [[prediction market]] [[Augur (software)|Augur]] would use election data to settle corresponding bets.<ref>{{cite arXiv |eprint=1501.01042 |class=cs.CR |first=Jack |last=Peterson |title=Augur: a decentralized oracle and prediction market platform |date=30 November 2020}}</ref> |
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Examples of data transmitted by oracles to smart contracts include price information, the successful completion of a payment, the temperature measured by a sensor, election outcomes, etc. Data can be supplied by other software (databases, servers, or essentially any online data source), or by hardware (sensors, barcode scanners, etc.). A hardware oracle can be seen as relaying real-world events into digital values that can be understood by smart contracts. Both types are ''inbound'' oracles. ''Human oracles'' are individuals with specialized knowledge who can verify the authenticity of information before relaying it to smart contracts,<ref>{{cite arXiv|last=Beniiche|first=Abdeljalil|date=2020|title=A Study of Blockchain Oracles|eprint=2004.07140|class=cs.CR}}</ref> and who prove their identity [[cryptography|cryptographically]]. |
Examples of data transmitted by oracles to smart contracts include price information, the successful completion of a payment, the temperature measured by a sensor, election outcomes, etc. Data can be supplied by other software (databases, servers, or essentially any online data source), or by hardware (sensors, barcode scanners, etc.). A hardware oracle can be seen as relaying real-world events into digital values that can be understood by smart contracts. Both types are ''inbound'' oracles. ''Human oracles'' are individuals with specialized knowledge who can verify the authenticity of information before relaying it to smart contracts,<ref>{{cite arXiv|last=Beniiche|first=Abdeljalil|date=2020|title=A Study of Blockchain Oracles|eprint=2004.07140|class=cs.CR}}</ref> and who prove their identity [[cryptography|cryptographically]]. |
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''Outbound'' oracles send information from smart contracts to the external world. For example, a smart contract receiving a payment could send information through an outbound oracle to a mechanism that unlocks a [[smart lock]]. |
''Outbound'' oracles send information from smart contracts to the external world. For example, a smart contract receiving a payment could send information through an outbound oracle to a mechanism that unlocks a [[smart lock]].<ref>{{cite web |date=27 September 2023 |title=Blockchain Oracle: Types, Uses and How it Works |url=https://www.geeksforgeeks.org/blockchain-oracle-types-uses-and-how-it-works/ |access-date=5 April 2024 |website=GeeksforGeeks}}</ref> |
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Oracles are also used in [[Decentralized finance|DEFI]], [[Online gambling|gambling]], [[Metaverse|Metaverse gaming]], [[Non-fungible token|NFT-s]], and [[Smart contract|Smart Contract]] [[insurance]].<ref>{{cite web |title=What is an Oracle in Blockchain? |url=https://learncrypto.com/knowledge-base/basics/what-is-an-oracle-in-blockchain |access-date=5 April 2024 |website=LearnCrypto}}</ref> |
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== Concerns == |
== Concerns == |
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| ⚫ | If an oracle relies on a single source of truth (''centralized''), that can lead to issues: the data source can be hacked in a [[man-in-the-middle attack]], or altered by its owner, in order to sway smart contracts. ''Decentralized'' oracles (''consensus oracles'') increase the reliability of the information provided to smart contracts by querying multiple data sources, thus distributing trust between participants. However, this does not achieve [[wiktionary:trustless|trustlessness]], since oracles are not part of the main blockchain consensus, and thus not part of the security mechanisms of public blockchains.<ref>{{cite web |title=A systematic literature review of blockchain-based applications: Current status, classification and open issues|url=https://www.sciencedirect.com/science/article/pii/S0736585318306324|date= March 2019|access-date= 4 April 2024 |website=ScienceDirect}}</ref> |
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{{unsourced section|date=May 2021}} |
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| ⚫ | If an oracle relies on a single source of truth (''centralized''), that can lead to issues: the data source can be hacked in a [[man-in-the-middle attack]], or altered by its owner, in order to sway smart contracts. ''Decentralized'' oracles (''consensus oracles'') increase the reliability of the information provided to smart contracts by querying multiple data sources, thus distributing trust between participants. However, this does not achieve [[wiktionary:trustless|trustlessness]], since oracles are not part of the main blockchain consensus, and thus not part of the security mechanisms of public blockchains. |
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== References == |
== References == |
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{{reflist}} |
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[[Category:Blockchains]] |
[[Category:Blockchains]] |
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[[Category:Computation oracles]] |
[[Category:Computation oracles]] |
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Revision as of 14:05, 5 April 2024
 | This article needs additional citations for verification. (March 2021) |
 | This article possibly contains original research. (May 2021) |
A blockchain oracle is a third-party service that connects smart contracts with the outside world, primarily to feed information in from the world, but also the reverse. Information from the world encapsulates multiple sources, so that decentralized knowledge is obtained. Oracles provide a way for the decentralized Web3 ecosystem to access existing data sources, legacy systems, and advanced computations. Decentralized oracle networks (DONs) enable the creation of hybrid smart contracts, where on-chain code and off-chain infrastructure are combined to support advanced decentralized applications (dApps) that react to real-world events and interoperate with traditional systems.[1]
Examples
Many Ethereum applications use oracles. For example, prediction market Augur would use election data to settle corresponding bets.[2]
Examples of data transmitted by oracles to smart contracts include price information, the successful completion of a payment, the temperature measured by a sensor, election outcomes, etc. Data can be supplied by other software (databases, servers, or essentially any online data source), or by hardware (sensors, barcode scanners, etc.). A hardware oracle can be seen as relaying real-world events into digital values that can be understood by smart contracts. Both types are inbound oracles. Human oracles are individuals with specialized knowledge who can verify the authenticity of information before relaying it to smart contracts,[3] and who prove their identity cryptographically.
Outbound oracles send information from smart contracts to the external world. For example, a smart contract receiving a payment could send information through an outbound oracle to a mechanism that unlocks a smart lock.[4]
Oracles are also used in DEFI, gambling, Metaverse gaming, NFT-s, and Smart Contract insurance.[5]
Concerns
If an oracle relies on a single source of truth (centralized), that can lead to issues: the data source can be hacked in a man-in-the-middle attack, or altered by its owner, in order to sway smart contracts. Decentralized oracles (consensus oracles) increase the reliability of the information provided to smart contracts by querying multiple data sources, thus distributing trust between participants. However, this does not achieve trustlessness, since oracles are not part of the main blockchain consensus, and thus not part of the security mechanisms of public blockchains.[6]
References
- ^ "A systematic literature review of blockchain-based applications: Current status, classification and open issues". ScienceDirect. March 2019.
- ^ Peterson, Jack (30 November 2020). "Augur: a decentralized oracle and prediction market platform". arXiv:1501.01042 [cs.CR].
- ^ Beniiche, Abdeljalil (2020). "A Study of Blockchain Oracles". arXiv:2004.07140 [cs.CR].
- ^ "Blockchain Oracle: Types, Uses and How it Works". GeeksforGeeks. 27 September 2023. Retrieved 5 April 2024.
- ^ "What is an Oracle in Blockchain?". LearnCrypto. Retrieved 5 April 2024.
- ^ "A systematic literature review of blockchain-based applications: Current status, classification and open issues". ScienceDirect. March 2019. Retrieved 4 April 2024.