Redefining Oracles: Unveiling RedStone’s Next-Gen Approach
In 2021, the DeFi ecosystem witnessed explosive growth, with new protocols dominating headlines across various news portals. While financial data feeds serve as the bedrock for decentralized products like synthetics and insurance, the true potential of Web 3.0 is hindered by the scarcity of diverse data types. Enter RedStone Oracles, ushering in a transformative era with a distinctive strategy — storing non-standard data on Arweave and seamlessly delivering it to all EVM-compatible chains.
Understanding the Role of Oracles
Oracles, at their core, function as middleware facilitating communication between blockchains and off-chain systems such as data providers, cloud services, IoT devices, and payment systems. Smart contracts on blockchains, including Ethereum, rely on oracles to make decisions based on real-world data, ensuring the execution of agreements or commands. The data collected can range from rainfall in a specific area to the number of votes received by a political party.
However, the traditional approach of using centralized or third-party oracles contradicts the principles of blockchain technology, introducing non-deterministic and unsynchronized external data. This misalignment results in what is commonly known as The Oracle Problem.
Navigating The Oracle Problem
Blockchain networks, designed for decentralized independence, face challenges in directly interfacing with the external world. They operate within isolated sandboxes, unable to access traditional services or generate in-house data. This limitation cripples their ability to execute contracts dependent on external data, posing what is referred to as The Oracle Problem. Early attempts at solving this problem led to proprietary oracle solutions, but these proved vulnerable, resulting in significant hacks and financial losses.
The State of Play Today
In the current landscape, blockchain projects often persist all data directly on-chain to address the challenges. However, this approach incurs high maintenance costs, making data storage on Ethereum exceptionally expensive. Ethereum’s design, favoring low-latency computation over storage, exacerbates these costs and restricts support to only a handful of tokens. Despite these obstacles, the Oracle Market Cap stands at around $14 billion as of January 2022, reflecting the growing demand for diverse and reliable data in the expanding DeFi and crypto industry.
Introducing RedStone’s Innovative Solution
RedStone addresses these challenges with a flexible and cost-effective oracle solution. Leveraging Arweave’s blockchain storage, RedStone pioneers a new generation of oracles designed to accommodate the evolving needs of modern DeFi protocols. Here are key aspects of RedStone’s approach:
- Affordable Storage: RedStone utilizes Arweave, drastically reducing storage costs compared to chains like Ethereum. Storing 1GB on Arweave costs $35, whereas on Ethereum, it could exceed $1.7 million. Low operating costs enable processing more data with higher update frequency.
- On-Demand Fetching: RedStone’s innovation lies in delivering feeds to various chains by storing data on Arweave. Unlike traditional oracles, RedStone does not upload information on the blockchain at fixed intervals. Instead, a network of nodes and partners, including Streamr, makes data available to DeFi projects in a decentralized public cache. The EVM-Connector injects data into the destination chain only when needed.
- Flexible Data Streams: RedStone can process various data types, extending beyond asset price data. With a focus on underserved areas in Web3, RedStone aims to provide custom and secure data feeds for NFTs, gaming, insurance, sports statistics, green bonds, credit scoring, and more.
- Data Integrity: RedStone ensures data integrity through a network of staked data providers. Providers stake RedStone tokens as collateral, and their activity records are permanently available on the Arweave chain. The dispute resolution logic is powered by the ArGue protocol based on Schelling point consensus.
- Cross-Chain Oracle Solutions: RedStone’s cryptographically signed data can be verified on any chain supporting basic cryptographic primitives. While data is persisted on Arweave, it can be used with any blockchain. Initially focusing on EVM-compatible chains like Ethereum, Celo, Polygon, and Avalanche, RedStone plans to become chain-agnostic in the future.
Current Progress and Future Roadmap
RedStone has already fetched data for over 1000 assets, including crypto tokens, stocks, currencies, and commodities. The team is actively working on connecting more data sources and onboarding new providers. A token release with an incentivization program for early adopters is in the pipeline. RedStone’s commitment to transparency and decentralization is reflected in the automated process for data provider onboarding via RedStone Contracts.
As RedStone continues to evolve, the team is focused on expanding functionalities, connecting more data sources, and presenting use cases in upcoming blog posts. The community can stay updated by following RedStone on Twitter and joining the Discord channel.
In summary, RedStone emerges as a beacon of innovation in the oracle space, providing a solution that aligns with the dynamic needs of modern DeFi protocols. By embracing affordability, flexibility, and decentralization, RedStone sets the stage for a new era of oracles, catering to a diverse range of data requirements in the decentralized ecosystem.
