Oracles

Definition

Third-party services that provide real-world data to smart contracts, since a blockchain cannot access data outside its network by itself.

Types of Oracles

Software Oracles

Handle online data and deliver it to smart contracts.

Hardware Oracles

Handle offline data, typically from IoT, and deliver it to smart contracts.

Input Oracles

Fetch data from the real-world (off-chain) and deliver it onto a blockchain network for smart contract consumption.

Output Oracles

Allow smart contracts to send commands to off-chain systems that trigger them to execute certain actions.

Cross-Chain Oracles

Can read and write information between different blockchains.

Compute-Enabled Oracles

Use secure off-chain computation to provide decentralized services that are impractical to do on-chain due to technical, legal, or financial constraints.

Decentralized Oracles Network (DON)

Group of multiple independent oracles node operators and multiple reliable data sources that provide data to smart contracts, like Chainlink. It enables the creation of hybrid smart contracts, where on-chain code and off-chain infrastructure are combined.

Use Cases

Decentralized Finance (DeFi)

Oracles are used to access financial data about assets and markets.

Dynamic NFTs and Gaming

Oracles enable non-financial use cases for smart contracts such as dynamic NFTs and gaming applications.

Insurance

Insurance smart contracts use input oracles to verify the occurrence of insurable events during claims processing.

Enterprise

Cross-chain oracles offer enterprises a secure blockchain middleware that allows them to connect their backend systems to any blockchain network.

Sustainability

Hybrid smart contracts are advancing environmental sustainability by creating better incentives to partake in green practices through advanced verification techniques around the true impact of green initiatives.