In the presentation below, Mario Cao, Head of Research at SEDA Protocol, presented on the design, goals and architectural overview of their multi-chain native oracle and the prospects of data request bridging.
ABOUT SEDA PROTOCOL
SEDA is the foundation of real-world data on web3. It provides a robust connection that enables seamless connectivity and harmony among diverse blockchain networks. It features a fully permissionless, trust-minimized network capable of transporting any data to any chain with rapid finality, making SEDA accessible without permissions from any network.
SEDA aggregates data from off-chain sources and other blockchains, utilizing an innovative overlay network and relayers for efficient distribution across various blockchain networks. This streamlined cross-chain communication process facilitates seamless support for both EVM and non-EVM networks. Additionally, SEDA empowers smart contracts to conduct complex computations on queried data, highlighting its high programmability and versatility in enhancing decentralized applications.
THE ORACLE PROBLEM
Smart contracts can’t access or verify real-world information. They require an external connection that provides accurate and trustworthy data outside the blockchain. Oracles act as intermediaries and provide that connection, but often introduce issues like centralized chokepoints, limited bandwidth, poor scalability, and unsustainable economics. Effectively becoming the weakest link in decentralized networks.
Relay contracts are smart contracts deployed on a blockchain network to facilitate communication from outside the blockchain or different blockchain networks. The relay contract validates the cryptographic signatures on the incoming message, interprets its content, and triggers the appropriate smart contract functions. It may employ specific encoding and decoding mechanisms to ensure that data can be processed by other blockchains.
Cryptographic proof employs mathematical and cryptographic techniques to confirm the authenticity and integrity of a claim or statement. Digital signatures use a private key to sign data, allowing anyone with the corresponding public key to verify the signature. Cryptographic hash functions are another example, taking data as input and producing a fixed-size hash. A minor change in the data drastically alters the hash, confirming if the data has remained unaltered.
ORACLE EXTRACTABLE VALUE
Oracle Extractable Value (OEV) refers to the financial gains that can be extracted by exploiting the timing delays and transaction reordering inherent in blockchain networks. OEV emerges from the time lag between fetching external data, and its utilisation in smart contract execution which provides opportunities for malicious actors to front-run transactions or manipulate prices.
Some protocols are exploring the concept of MEV auctions to rebalance profits while scaling solutions reduce the time window for attackers.
Blockchain Oracle Summit (BOS) is an annual conference where blockchain enthusiasts gather to discuss the relevance of oracles as well as their challenges. Experts and seasoned developers gather to share their development and use of oracle solutions. Article by Michael Abiodun.