Orakl Network In 2024
Decentralized Finance (DeFi) has become one of the strongest use cases for blockchain technology. The recently announced kaia blockchain, born from the merger between Klaytn and Finshia, even designated strengthening of the DeFi landscape as one of their main goals. Building a robust and strong DeFi ecosystem is a daunting task, but our team at Orakl Network, the official oracle of Klaytn blockchain, is ready to help achieve this goal.
Blockchains are by design isolated from the rest of the world, including other blockchains themselves. However, this feature does not always benefit on-chain applications. Orakl Network aims to securely and seamlessly bridge the gap between off-chain and on-chain, helping kaia blockchain to grow into a global blockchain network. In this blog post, we describe the plan for Orakl Network in 2024, the current progress, and the reasoning behind the proposed updates.
Orakl Network Current State
Orakl Network offers four different services on the Klaytn network: Data Feed, Verifiable Randomness Function, Request-Response, and Proof of Reserve. While all of them open a plethora of new possibilities on-chain, Data Feed serves the most important role in financial applications on-chain. Without a reliable, trusted data feed, the blockchain network is impoverished of numerous applications that would otherwise be unnecessarily difficult to build.
At the time of writing this blog post, Orakl Network provides 32 different financial feeds, most of which represent token prices (e.g., KLAY/USDT), while the rest cover highly liquid forex rates (e.g., KRW/USD). Data feeds are updated at least once every 15 seconds by a decentralized set of node operators using a technique called On-Chain Aggregation. The submitted data can be accessed for free by both off-chain and on-chain users, who then integrate them into their DeFi services.
What Have We Learned From Operating Data Feed?
During the planning for the improved data feed service, we were guided by three simple principles: Orakl Network’s Data Feed should be better, faster, and cheaper. But what does that mean? The current Data Feed service is mainly limited by the number of feeds (32), update frequency (≤ 15 seconds), and the data submission cost that grows linearly with the number of active node operators.
If there are DeFi teams that require access to a feed that Orakl Network does not support (please reach out to us at business@orakl.network), they would be limited and might give up on deployment to kaia blockchain. Moreover, some protocols require sub-second or on-demand updates that are currently not offered.
The Orakl Network Data Feed is based on an On-Chain Aggregation technique that utilizes on-chain data for node synchronization. The data transfers from off-chain to on-chain are independent for each node and feed. While blockchain is great for long-term immutable data storage, we have learned that even a brief inability to access a necessary on-chain state of the Orakl Network Data Feed has a negative impact on our node synchronization scheme. And since every node has to make submissions to the on-chain smart contracts where the submissions are aggregated, synchronization issues would become even more common with a faster submission frequency and an increased number of nodes.
Off-Chain Aggregation
We searched for solutions through which we could increase the number of data feeds, accelerate submission frequency, and lower the cost of data submissions. After extensive research, we decided to implement the Off-Chain Aggregation approach. It removes the need for on-chain data synchronization, which indirectly solves many of the aforementioned issues. Off-Chain Aggregation requires decentralized nodes to communicate with each other to exchange their observations and agree on the data that one of the nodes will submit. The submission includes a proof from each participating node that is validated on-chain before the data can be accessed by users. By having oracle proof, we are able to maintain transparency about the number of participating oracles, similar to the one from On-Chain Aggregation.
The implementation of the Off-Chain Aggregation node is completed and currently being tested on Klaytn’s testnet, Baobab. The deployment of Off-Chain Aggregation is planned before the end of the first half of this year, and discontinuation of On-Chain Aggregation is scheduled around the same time.
Submission Proxy
Together with the introduction of Off-Chain Aggregation, we decided to change how data are submitted to on-chain. Previously, one transaction was required for single data feed submission, and every node operator had to have one oracle EOA for each data feed.
We designed a Submission Proxy smart contract that works as an interface between off-chain oracles and on-chain data feeds. Orakl Network node operators would not need to keep track of more than one EOA, and a single transaction could handle submissions for multiple data feeds. The Submission Proxy is additionally responsible for submission proof validation. Having proof validation in the proxy smart contract allows us to implement future proof validation improvements without impacting users.
The implementation of the Submission Proxy and other smart contracts related to the Orakl Network Data Feed has been accomplished and is currently being audited by CertiK, one of Web3’s leading smart contract auditors.
Data Availability Layer
There are DeFi protocols that do not need data feeds to be updated at predefined intervals but require access to data that can be submitted at any time. Oracles that support such functionality are called pull-based oracles because they allow whitelisted users to “pull” data from them. Users then submit data themselves to the on-chain data feed, and since the data feed smart contract includes an on-chain validation step that checks whether the submission was created by valid oracles and whether the submission value is still fresh, anybody with access to a properly created transaction data is allowed to submit. The opposite of pull-based oracles are push-based oracles which “push” data directly to on-chain. Orakl Network is going to support both push- and pull-based data access techniques.
In the second half of this year, Orakl Network is going to launch a new service called the Data Availability Layer. Protocol developers will be able to access off-chain data feed transactions on-demand and submit them to the on-chain data feed at any frequency.
Increased Quality and Number of Data Feeds
In the first quarter of this year, we implemented and deployed an improved version of the Orakl Network Fetcher that supports price fetching from decentralized exchanges (DEX). This opens up a way for early-stage projects that do not have a listed token on centralized exchanges (CEX) to be accessible through the Orakl Network Data Feed. Moreover, we are able to provide more holistic token price feeds that better reflect both on-chain and off-chain markets.
The proposed Off-Chain Aggregation process is performed in two steps: local and global. The local aggregation is executed on each node independently and shared with the other nodes in the network. Once nodes receive locally aggregated data, they perform a global aggregation step and share the final aggregated value with all nodes in the network. We assume that all nodes in the network have the same level of trust, which makes the median a suitable operation for the global aggregation step. However, the same cannot be said about the local aggregation step, during which nodes combine data from various exchanges. Different exchanges can have different trading volumes at different times, and simply using the median is not advisable. Instead, we are going to utilize the volume-weighted average price (VWAP) to compute the local aggregate on each node. By using VWAP, prices from exchanges with higher liquidity will contribute more to the final value than exchanges with lower liquidity.
Blockchain oracles are frequently singled out as prime targets for attacks. They can be attacked directly, or indirectly through manipulated data sources. Sudden temporary price changes can cause protocols to lose large amounts of tokens, and even though oracles have processed and transferred the data correctly, they could be blamed for the consequences. To protect DeFi protocols from oracle attacks, we have decided to implement on-chain time-weighted average price (TWAP). TWAP allows protocols to compute average prices over arbitrary time periods, thereby enabling them to be protected during sudden price changes.
In the third quarter of this year, we plan to support 100+ data feeds. Our main focus will be on data feeds relevant to the kaia ecosystem. If you want to include a token from the kaia ecosystem in the Orakl Network, don’t hesitate to reach out to us at business@orakl.network.
New to Orakl Network?
Orakl Network is an easy to use native token oracle that supports Verifiable Random Functions (VRF), Request-Response, Data Feed and Proof of Reserve. You can learn about each of these functionalities at our documentation or dive directly to code with curated hands-on tutorials for each of our services: vrf-consumer, request-response-consumer and data-feed-consumer.
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