With the rise of DeFi, the term "oracle machine" has also become popular. ChainLink, the leading project in the oracle field, its token LINK has increased more than 15 times from $2.1 in March last year to $32.3 now, ranking 11th among all encrypted digital currencies. Among the top 100 coins, there are 4 oracle tokens.

The oracle sector has shown great potential for development, so what is the oracle? Read it with everyone today.

The English word for oracle machine is "Oracle", which means oracle. This word also comes from a Greek myth. It is said that when the people encounter difficulties, they will pray to the gods on Mount Olympus for an oracle, and the gods will give some guidance and provide the people with "information" to solve the problem. ".

The oracle machine is also an extension of this myth, and it is a credible data provider. The oracle machine is a middleware that is linked to each other on the chain and off the chain, and is a connection point for the interaction between the blockchain and the real world data.

The closed-loop chain structure of the blockchain determines that it is a closed environment, and it is impossible to actively obtain real data in the real world outside the chain. For blockchain technology to be truly applied, information outside the network is needed to execute transactions and provide services that people can really benefit from. The middleware that provides information is the oracle machine. The oracle machine has become an infrastructure component of the blockchain world, and the expansion of blockchain application scenarios depends on the development of the oracle machine and the expansion of its data dimension.

In order to better understand the concept of oracle, let’s explain it together according to the specific classification. There are many ways to classify oracle machines. Here, the data verification method is used for classification.

1) Direct data verification oracle machine: The data is directly verified on the chain, and the provider of the data is directly verified and provided on the chain. A typical representative of this type of oracle is NEST.

NEST is a decentralized price oracle network running on Ethereum, which solves the problem of price on-chain through a decentralized incentive scheme. Every quotation on NEST will be verified by validators in the whole market. The quotation will only take effect on the chain after passing the verification period. NEST's verification method is a completely decentralized method, which is more decentralized, safe and reliable, and in line with the blockchain spirit. However, NEST’s verification method inevitably has a disadvantage, that is, it depends on the Ethereum network. The congestion of Ethereum and the high gas fee of Ethereum are uncontrollable, and the operating cost is higher. It can only serve the Ethereum network.

2) Indirect data verification oracle: the verification of data is not direct, but indirectly ensures the authenticity and validity of the data by verifying the uploader (reputation node). ChainLink, the oracle machine we are most familiar with, uses this verification method.

Chainlink adopts the same model as the blockchain to establish a decentralized independent oracle network. The oracle in the Chainlink network obtains data from multiple oracle nodes and data sources, aggregates the data, and transmits the verified aggregated data to the smart contract to trigger contract execution, thereby avoiding centralization risks throughout the process . The advantage of this method is that the cost of obtaining data will be relatively lower, the frequency of data provision will be higher, and the performance will be better. However, this method is not a direct data verification, but depends on the reputation of the node, and there is a risk of centralization. In the case of insufficient node scale, the cost of doing evil is relatively low and the security is low.

The field of oracle machines developed relatively late, mostly developed after 17 years, and is still in an early stage of development. There are still some problems in the field of oracle machines, which still need to be adjusted and improved through practice. The future application scenarios of the blockchain will be unimaginably broad, which means that the future value of the oracle machine will also be unimaginable, and there is a huge market space waiting to be developed.