Top 10 Blockchain Oracles in 2022: Which Oracles Dominate the Market?

A blockchain oracle is a third-party platform that bridges smart contracts with the outside world and vice versa. Most of these platforms use network oracles that search, query, verify, and retrieve real-world data to smart contracts that run decentralized applications (DApps); some others use Application Programming Interfaces (APIs).

Typically, oracles are incentivized using the platform’s native token, Chainlink’s $LINK, for example, to follow the platform’s rules and retrieve reliable and useful data. The more adoption we see for blockchain oracles, the higher the utility of their respective native token, thus increasing the value and rewards of oracles.

There are dozens of blockchain oracles competing to be the best solution for on-chain data reliability. With so many options, it can be overwhelming for developers and companies to choose a solid option. Don’t worry – this article compiles the best blockchain oracles that will dominate the industry in 2022.

1. Chain links

Chain link (LINK) is the largest blockchain oracle in the industry and the only one to ever reach a market capitalization above the billion mark, according to data from CoinGecko.

Chainlink provides off-chain data to a wide range of blockchain-based ecosystems: layer-1. Layer-2s, sidechains and all kinds of DApps that run on smart contracts. It was launched as an Ethereum-based oracle in 2019 by SmartContract, a San Francisco-based software company. In December 2021, Eric Schmidt, former CEO of Google, joined Chainlink as a strategic advisor for future projects.

Chainlink provides on-chain services to hundreds of blockchain platforms and software companies, including Avalanche, Aave, Ampleforth, Compound, Swisscom, T-Systems and Associated Press.

Overall, Chainlink is a highly secure multi-chain platform that provides real-time on-chain services to hundreds of blockchain projects and software companies. Two of the most popular features are:

• Chainlink Verified Random Function (VRF): a protocol that generates a set of random values, and cryptographic proof of these values ​​was determined. This feature is mainly used by smart contracts running DApps that rely on unpredictable outcomes.
• Chainlink Automation: formerly Chainlink Keepers, it helps smart contracts with maintenance tasks, such as harvesting, liquidation, rebasing and setup costs and risks when accessing off-chain markets.
  

2. Universal market access – best for developers

Universal market access (UMA) is an Ethereum-based oracle that provides users with smart contract templates to create synthetic assets and financial contracts.

Synthetic financial contracts are tokenized versions of real products, such as derivatives, that replicate and track their performance and price using smart contracts, allowing average investors to gain exposure to a market with a high barrier to entry.

With UMA’s user-friendly platform, users can digitize all existing real-world financial products: CFDs (Contracts for Difference), commodities and even cryptocurrencies. In this way, DeFi markets can have wider exposure to the real world. In terms of crypto, UMA allows users to own Bitcoin without actually holding the coin by creating a tokenized version of BTC or other cryptos.

UMA is open source and decentralized – all smart contracts are powered and governed by the UMA community, which uses the UMA token to vote and submit proposals. Users can also earn rewards according to the amount of activity they use and the number of tokens staked in the protocol.

3. API3

API3 is a community-driven oracle that allows users and developers of blockchain apps or enterprises to connect their Web3 apps to the platform to receive streams of off-chain data from multiple markets, including stocks, commodities, cryptocurrencies and more.

API3 uses dAPIs, decentralized application programming interfaces, to feed data directly from first-party sources, unlike other oracles, which use oracle nodes as intermediaries to query, query, and deliver data.

Another important feature of API3 is Airnode, a Web3 middleware that connects web APIs directly to any blockchain app; this allows any API to be compatible with blockchain technology.

Some organizations working on API3 are Fantom, Polygon, Digital Currency Group, AllianceBlock and more.

The API3 token powers the API3 platform, used by holders to stake and win voting rights in the API3 DAO (Decentralized Autonomous Organization). The pool of staked tokens allows API3 to offer “service coverage” to customers in the event of dAPIs malfunctioning, helping them mitigate risk. Not all oracles provide this feature in case of failed or unreliable oracle nodes.

4. Tape protocol

Tape protocol is a cross-chain oracle built on Cosmos, an ecosystem of interoperable networks, which provides tamper-proof data input to smart contracts using its public blockchain, BandChain.

BandChain’s validators request data from APIs or other web and forward this data to users and devices. The protocol can send data to multiple blockchains thanks to Cosmos’ IBC (Inter-Blockchain Communication) protocol. Users can also write their own oracle scripts to receive real-world data streams, from multiple markets such as stocks, assets, commodities and crypto, to real-world events such as weather, sports and more.

Band Protocol uses a Delegated Proof-of-Stake (DpoS) consensus algorithm. When smart contracts request data, the protocol chooses a random validator with a high amount of stake $BAND to take on the job. Validators must stake $BAND, the protocol’s inflation token, before retrieving data, and other validators vote on the authenticity of said data.

Some of Band Protocol’s notable supporters and integrations are Binance, Fantom, Moonriver and Iron Bank.

5. Nest Protocol

NEST protocol is built on the Ethereum network and describes itself as the “truly decentralized oracle out there.”

The NEST network uses a reference system called “quotation mining” to get accurate off-chain information, which is a simple process and divides the network participants into three:

• Price callers: users or entities that pay a fee to use the NEST protocol
• Miners: provide price quotes for smart contracts
• Verifiers: accept price offers

Furthermore, all developers on NEST use the NEST Probabilistic Virtual Machine (PVM), a type of virtual machine similar to EVM in that it provides a library of basic functions for developers to put together as many projects and stochastic assets as chained assets which can be issued or destroyed in response to random information flows.

The NEST token powers the NEST ecosystem and acts as a financial incentive for network participants. Miners and verifiers must stake a certain amount of NEST tokens before providing and verifying data for smart contracts.

6. XYO Network

XYO network is an Ethereum-based protocol that uses a network of anonymous and decentralized entities to provide accurate information about an object’s or a person’s geospatial location. This allows apps to perform smart contract transactions based on location verification.

The XYO Network uses proof of origin as its consensus algorithm, which allows the protocol to confirm the location of a particular person or object by collecting, verifying and storing information based on “bonded witness” interaction. These interactions occur among XYO’s four physical and decentralized components:

• Sentinels: devices that act as location witnesses, creating ledgers to temporarily solve heuristics – which are methods for solving problems and delivering reliable results.
• Bridges: devices that interpret geospatial data and transfer the information in the ledgers from sentries to archivists.
• Diviner: devices that analyze heuristics and are rewarded for providing an accurate analysis.
• Archivers: entities that store raw data from bridges and make it available to forecasters and are compensated only when the data is retrieved.

The XYO Network was created in 2018 along with a partnership with Spaceflight, a space transportation service provider, which used XYO’s devices to communicate the position of satellites. Since its launch, oracle has formed partnerships with several technology and software firms, including Chainlink, Microsoft and Deo Digital.

7. iExec RLC

iExec can be described as the Amazon Web Services (AWS) of the DeFi sector. This oracle offers a marketplace for cloud computing services that can connect Web2 businesses and apps with Web3.

iExec provides an easy-to-use set of APIs that even developers with little or no blockchain knowledge can use to build their own oracles and set up their Web3 apps.

Users can also rent out their apps or data sets to other users and be rewarded for their data services while maintaining the ownership and privacy of these assets. These assets can solve specific problems across multiple industries, including supply chain, healthcare, B2B and more.

8. WINkLink

WINkLink is a simple and user-friendly blockchain oracle solution built on the TRON network. It allows users to create custom network oracles to query, query, and feed real-world data into smart contracts. This data can range from crypto, stocks and NFTs to weather information, sports, real estate and more.

9. Narrator

Counter is a permissionless oracle that allows DApps to gain off-chain access from multiple industries. It was built by Daxia, a derivatives platform built on Ethereum.

Tellor uses a reporting client – ​​a system that relies on a network of reporters to search, query, verify and validate data. It has two types of data feeds; SpotPrice, which provides market data from existing APIs, and Custom Price, which modifies data according to customer needs.

10. DIA

DIA (short for Decentralized Information Assets) is a multi-chain community-driven oracle solution for Web3 apps. DIA is available across multiple blockchains, from layer-1s to layer-2s, including Solana, Ethereum, Avalanche, Fantom, Arbitrum, Aurora and Polygon.

DIA delivers enterprise-class data streams for entities looking to track traditional and digital financial applications, such as asset prices, lending rates, metaverse data, NFTs, cryptocurrencies and more. These data feeds are fully customizable, allowing users to create specific feeds depending on their needs by configuring the sources and methods.

Final Thoughts: Why Are Blockchain Oracles So Critical to Web3?

Oracles are essential to the Web3 ecosystem as they expand the scope of utility of blockchain-based applications. Without oracles, smart contracts would have limited possibilities outside of the blockchain world. A common misconception is that an oracle is a data source in itself. This is wrong since an oracle is a layer that retrieves and verifies external information.