We Need More Competition Among Decentralized Blockchain Oracle Solutions


Smart contracts have a lot of potential, even though they remain fairly limited in approach. Obtaining external data is impossible for a contract on its own. The future will inevitably involve decentralized oracles, which can serve many different purposes. 

The Limitations of Smart Contracts

Expanding the use of blockchain technology to forge bonds and agreements between different parties is a logical step in the evolution. I firmly believe smart contracts are the next frontier in this industry, even though they are still in their infancy stage of development. Currently, smart contracts are primarily used for a handful of use cases, most of which will never attract attention outside of the cryptocurrency community. 

To change that narrative, smart contracts themselves will have to undergo an evolution. One of their key flaws is the inability to access external information in any capacity. One option to explore comes in the form of blockchain oracles. These systems are widely considered to be core building blocks of the blockchain ecosystem. Being able to obtain external information and interface with remains a key hurdle to overcome. 

One can state that blockchain oracles are effectively bridging the gap between a blockchain ecosystem and the outside world. It is a big step forward to forge contractual agreements and acquire the necessary relevant information to execute certain conditions. Enhancing the scope in which smart contracts can operate and thrive will make this technology more appealing and potent. 

Centralization Remains a Concern

Setting up blockchain oracles can be done in different ways. One common approach is to use a centralized solution, although that poses its own set of risks and drawbacks. Verifying the integrity of data should never be biased, yet with a centralized approach, that is almost impossible to avoid. Tapping into as many reliable data sources as possible, comparing the information, and then processing the details is the only path forward. 

After all, an oracle is merely a system that queries and authenticates external data sources and relays the information. It is not an actual data source, but it must be coded to tap into specific data sources. The more sources, the more reliable the information will turn out to be. Whether it is price information, completing transactions, or updating product stock, it needs to be done properly, securely, and without bias. 

In my humble opinion, centralized blockchain oracles will have a very short lifespan. We already see dozens of projects explore decentralized solutions, even though most of them opt for one and the same provider. This is another aspect of centralization that will always be a concern in this industry, even though it doesn't necessarily need to be. 

While I do believe Chainlink has the right approach in terms of decentralized blockchain oracles, not everyone should rely on this technology just yet. There are other providers worth exploring  in this regard. Cryptocurrency and blockchain want to be taken seriously by the mainstream. To achieve that goal, we will all need to work together to create a future where decentralization is the norm, rather than an option.

DeFi Needs Decentralized Oracles

The decentralized finance segment  has gotten a lot of interest as of late. Users want quick access to new launches before they hit platforms like Binance or Coinbase. Several exchanges, such as MXC Exchange, and a few others, continue to push the envelope in terms of providing users with exposure to DeFi tokens and mining. At the same time, we all need to remember this is only one side of the medallion. 

Investing in DeFi assets for speculation only is never the right approach. In my opinion, the focus needs to be on decentralization as much as possible. That includes DeFi projects using decentralized blockchain oracles for their unique purposes. Considering how decentralized finance aims to be a more transparent approach to finance, all of the relevant data accessed by the project needs to be as decentralized and verifiable as it can be.

Finding the Right Solution is Crucial

Regardless of how one wants to look at the situation, it all comes down to finding effective oracle solutions. Projects exploring this option need to find ways to maintain their sovereignty without compromising on the overall focus. That may be a lot more difficult than onlookers assume. In its current form, there is no decentralized blockchain oracle capable of suiting every need just yet.

Personally, I think that is a positive sign. Competition needs to emerge in this space to not only explore different options, but also give rise to new and powerful solutions. 

Although Chainlink is currently the go-to oracle solution for most projects, I keep my eye on the space to explore what else is out there. One project, by the name of Razor Network, aims to offer "truly decentralized oracles' A very bold claim to live up to, as there are no second chances to make a good first impression in this industry.

Under the hood, Razor Network leverages network stakers to provide data to smart contracts. This is an unusual way of obtaining information from multiple different sources. It can also offer an incentive to participants to keep providing data and remain honest while doing so. The concept of give-and-take is, in my book, incredibly powerful when it comes to decentralizing anything. People are seemingly not interested in doing too many things without being rewarded somehow. 


The future certainly looks bright for decentralized blockchain oracles, especially when more competing services come to market. There needs to be a much broader access to services that focus on decentralized solutions, whether it is at the technology level, or at the data level. When these two segments meet in the middle, I firmly expect great things to happen. 

For the time being, there aren't too many decentralized blockchain oracle providers yet. That situation will hopefully come to change in the future. The demand for solutions like these will keep on growing, especially if they prove to be extremely scalable. Whether that will be achieved in the coming months, or if it will take years, is impossible to predict.



The views and opinions expressed in this article are based on the authors' personal opinion and experience, and the information contained herein is not intended to be a source of advice or credit analysis with respect to the material presented, and the information and/or documents contained in this article do not constitute investment advice.

Join Telegram

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

This is why a mere 15% rally in Lido DAO price could be a game-changer for LDO holders

This is why a mere 15% rally in Lido DAO price could be a game-changer for LDO holders

Lido DAO price is following the rest of the market due to the regulatory events that transpired in the last few days. However, the DeFi token is generally unlikely to pursue the path set by any other cryptocurrencies, including the likes of Bitcoin. This might play in favor of LDO.

More Lido News

LINK holders opt to sell as Chainlink price falls by 9% in a week, new investors on the rise

LINK holders opt to sell as Chainlink price falls by 9% in a week, new investors on the rise

Chainlink price, after following the broader market cues, is nearing a key support level that was last visited by the coin in January this year. This has discouraged LINK holders to the point where selling has become a preferred option. However, newer investors are countering this selling by accumulating, preventing a severe decline.

More Chainlink News

Optimism price could rally 50% as network upgrade inspires new wave of OP adoption

Optimism price could rally 50% as network upgrade inspires new wave of OP adoption

Optimism (OP) price appears to have found support after a new buyer congestion zone came into effect to prevent the free fall. Accordingly, the Ethereum Layer 2 (L2) token is trading horizontally, giving bulls time to accumulate OP at affordable rates.

More Optimism News

Binance CEO addresses chat records disclosed by the SEC

Binance CEO addresses chat records disclosed by the SEC

Binance CEO Changpeng Zhao has issued an internal address to company staff, asking them to focus on work and developing products people can use. The internal memo comes after the United States Securities and Exchange Commission (SEC) disclosed chat records between Binance employees in an attempt to support its case against the largest crypto exchange by trading volume.

More Cryptocurrencies News

Top 3 cryptocurrencies that outperformed Bitcoin, Ethereum this week

Top 3 cryptocurrencies that outperformed Bitcoin, Ethereum this week

The US Securities and Exchange Commission’s (SEC) crackdown on cryptocurrencies triggered a correction in the prices of Bitcoin, Ethereum and several altcoins with large market capitalization. 

Read full analysis