The Oracle Problem
When a smart contract needs to retrieve information from the real-world, it achieves this through an oracle. Oracles are crucial for the mainstream adoption of smart contracts because the deterministic nature of smart contracts will be severely limited without information from the real-world.
However, because smart contracts rely so much on oracles, it poses a familiar risk that centralized systems have, it can be exploited, especially if oracles are created poorly. This problem with oracles has restricted the blockchain ecosystem as a whole. With the release of the Zap platform and their platform for initial oracle offerings (IOO), these issues are addressed.
A Marketplace Solution
Zap allows anyone to run data through its software development kit and list it on the Zap marketplace. The utility of bonding curves allows for the maintenance of trustworthy data when someone puts their oracle on the platform. Anyone can list their oracle on the Zap platform by selecting a starting price and a Zap to Dot bonding ratio. Dots are the secondary token of the Zap platform and is generated by staking or bonding Zap to an oracle. One dot equals one request of the data provided by the oracle. When a Dot is spent on a request by an oracle’s subscriber, that Dot is transferred to the owner of the oracle. The Zap is then held in the oracle contract ready to be redeemed at any time by exchanging your Dots back for Zap. The Zap to Dot bonding ratio determines how much the data requests, or dots, become. For example, an exponential price function of ten times for every thousand Dots released with the starting price of ten Zap would mean the data requests, or dots, become ten times more expensive for every thousand dots released.
Speculators who believe that the data an oracle provides is valuable, and that the provider will remain a good actor for the long term, can also bond their own Zap Tokens to that oracle. This incentivizes oracles to provide accurate data as more Zap is bonded since they want the data to be valuable. It only becomes as valuable as the trust placed on it from a monetary value.
This unfolds the dawn of initial oracle offerings (IOO).
The Introduction of Initial Oracle Offerings
Imagine if you have a well-coded oracle for the Ethereum to Bitcoin price, and the data for the oracle is pulled from Binance. If you were to put this oracle on the Zap platform, people might start to use it for the futures market. However, someone else might start to create another oracle that takes data from more exchanges and markets in order to have more accurate data. And eventually, someone might create an oracle with similar functionalities except it finds outliers and takes them out. The oracle that is best will be rewarded.
In what ways will oracle creators get people to bond Zap Tokens to their oracle? Will they create a website? Write a whitepaper detailing a timeline and creation of that oracle? An open-sourced system to maintain trust? It will be up to the providers to make their case.
The introduction of initial oracle offerings will be a monumental step for smart contracts. Now, data on real-estate, energy, anything and everything can be on the Zap platform. Also, with the introduction of OracleMarketCap.Com powered by Zap.Org, we can also track information on different oracles in the Zap platform.
Start Creating Your Own Oracle
With the Zap.tech oracle creation toolkit and an API, you can start creating your own oracles. You may also fund a community bounty to create an oracle. With the soon to be released Zap Store marketplace, you can browse oracles that have already been created and are ready to plug in your smart contract. To get a head start, you can also check out MyOracleWallet.Com
If you wish to find out more, go on Zap.Org or follow the Zap team on Twitter @ZapOracles. If you wish to start developing using the Zap platform, check out Zap.Tech and https://www.npmjs.com/package/zapjs.