What are Oracles?
Last updated
Last updated
Blockchain oracles are entities that connect blockchains to external systems, thereby enabling smart contracts to execute based on inputs and outputs from the real world.
Blockchain oracle mechanisms using a centralized entity to deliver data to a smart contract introduce a single point of failure, defeating the entire purpose of a decentralized blockchain application. If the single oracle goes offline, then the smart contract will not have access to the data required for execution or will execute improperly based on stale data. Even worse, if the single oracle is corrupted, then the data being delivered on-chain may be highly incorrect and lead to smart contracts executing very wrong outcomes.
Truly overcoming the oracle problem necessitates decentralized oracles to prevent data manipulation, inaccuracy, and downtime. A Decentralized Oracle Network, or DON for short, combines multiple independent oracle node operators and multiple reliable data sources to establish end-to-end decentralization.
Cross-chain oracles are oracles that can read and write information between different blockchains. Cross-chain oracles enable interoperability for moving both data and assets between blockchains, such as using data on one blockchain to trigger an action on another or bridging assets cross-chain so they can be used outside the native blockchain they were issued on.