New eBook from Amberdata: Demystifying Blockchain Oracles. As smart contract technology expands, oracles have been integral in broadening the scope in which blockchain-based decentralized applications (dApps) can operate. Oracles are the bridges between dApps and the outside world, allowing them to access off-chain data to implement complex financial primitives. Without oracles, the use cases of DeFi would be severely limited as dApps would only have access to information directly on-chain.
With the oracle landscape evolving rapidly, a broad overview of the technology is necessary to assess the market alternatives. This white paper aims to define the different types of oracles, explore the benefits of their mechanisms, and consider the myriad use cases they enable.
What is an oracle?
An oracle is a trusted authority which can be anything from a hardware system, a computer program, or even a human with specialized knowledge or skills. A blockchain oracle, however, is a piece of software that extracts real-world, or off-chain information, and provides it on the blockchain. Smart contracts automatically execute transactions on a blockchain when certain pre-specified conditions are met, but blockchains cannot make API calls to connect with data outside their network. Oracles provide the layer that queries external data sources from APIs or feeds and then transmits the requested data back to the blockchain. Oracles are not only imperative to DeFi, but also to Web 3.0, and data from oracles can take many forms, including price information, completion of payments, or even readings from IoT devices.
Download the eBook for an overview of the types of oracles and how they work, oracle networks, the pros and cons of each, the future of oracles and DeFi, and more.
Download the Demystifying Blockchain Oracles eBook below!