The Quest To Find Decentralized Oracle Services

The Quest To Find Decentralized Oracle Services

When Chainlink was introduced to the world, everybody thought it was just a meme. They started their popularity in 4chan, something that was considered “not mainstream” and full of “weird people who like to insult everybody”. Some people even called 4chan the comfort zone for the far right of western society. However, Chainlink quickly emerged from it and became much more mainstream.

Its technology, which introduced the concept of decentralized oracle services, has successfully impressed many big entities. Even Google itself praised Chainlink’s proof of concept and officially announced Link as its partner for its cloud service. And yes, when you think about it, the idea of finding an established decentralized oracle service is very important, as it will help the blockchain world to get verified and trustless data from the real world by connecting itself with the oracles.

So, here’s the question, when can we actually expect the blockchain technology to be able to seamlessly retrieve and export data to these decentralized oracles?

Data Settlement On-Chain Is Actually Not That Simple

The thing about Chainlink and its competitors (such as BAND Protocol) is that they believe they can easily connect the offline world’s data to the blockchain and settle it over there (on the chain). But the truth is often much more complicated than this. Take a look at decentralized temperature data. Let’s say there are a lot of IoT devices that can report the same temperature in one region or area. People say they are more trustable than just a single device reporting temperature, which is true, but how often you hear multiple devices have to verify a simple data like this, send them all to the blockchain, and settle/verify it there? 

Now imagine if there are many more data and activities from multiple IoT devices (not just temperature), and imagine if you need to settle them all in the blockchain. What do you expect? This is actually not as simple as it seems because many public blockchain ecosystems are still very early and not really that scalable in the first place. Slow and clogged networks will become a big obstacle when everybody starts to rely on it.

The Solution And Compromise

The good thing about the crypto space is that there is always something new that tries to compromise the older blockchains just to make their own chain more scalable. Look at all the newer gen blockchains; none of them use PoW (Proof of Work) because they understand that PoW mechanism makes everything very slow and unable to scale.

This is why the likes of BAND (which is much newer than Chainlink) adopt Cosmos’ technology as well as a consensus algorithm, because it helps them to save tons of gas fees and transaction waiting time. 

I do believe that decentralized oracle services are only possible if the blockchain that’s used to settle their information is not an established blockchain system like Ethereum, even if you attempt to build a layer 2 solution on it. It’s much more scalable if you just adopt something much newer, with much higher TPS, but still have a guaranteed amount of decentralization. 

At the end of the day, the main function of decentralized oracle services is to be able to connect off-chain data to the blockchain, and they need it to be decentralized so they can trust the data. This can benefit tons of different use cases and companies, but to get there, first, we need to have the proper blockchain mechanism to settle the data that they gather from the oracles.