As a seasoned researcher with extensive experience in the ever-evolving world of blockchain and decentralized finance (DeFi), I find myself intrigued by the recent developments in the Oracle landscape, particularly the rise of Pyth Network over Chainlink in transaction volume.
Despite having a smaller Total Value Secured (TVS), the blockchain network known as Pyth Network has managed to process more transactions over the past 30 days than Chainlink.
The change could be attributed to Pyth’s pull-based Oracle system, which delivers information only when requested rather than updating it frequently like Chainlink. This method is optimized for applications requiring real-time data access, particularly high-frequency ones such as trading.
Niklas Kunkel, founder and CEO of former Oracle leader Chronicle, discussed the changes in the Oracle landscape during an interview with CryptoMoon. “We’re seeing an interesting situation play out in Oracle dominance currently,” Kunkel said. He added:
“Chainlink appears to be losing market share to three key players: Chronicle, Pyth, and Redstone. Pyth and Redstone focus on Pull Oracles, which are built for speed and are ideal for derivatives and options protocols.”
Pyth hits $36 billion 30-day volume
Based on DefiLlama’s statistics, we see a rise in transactions involving Oracle providers like Pyth in TVS, suggesting a trend towards optimizing data for high-speed applications. In the last 30 days, Pyth has handled transactions worth approximately $36 billion, which highlights the need for Oracles capable of handling high-frequency demands.
During the latest market downturn, DeFi experienced a phase of expansion and creativity. However, Oracle technologies didn’t adapt quickly enough, according to Kunkel’s assessment. He further noted:
“This lack of innovation led them to gain a reputation as the Achilles heel of DeFi – often being the root cause of DeFi hacks.”
Via a pull-based approach, service suppliers such as Pyth are able to assist applications needing frequent updates, all while avoiding the increased operational expenses typically linked to larger providers due to these requirements.
In a recent update, Kunkel mentioned that Chronicle has revamped the concept of the Push Oracle, reducing operating expenses by 80% in terms of gas units of computational effort compared to Chainlink. This pull-based Oracle model enables service providers such as Pyth to support applications demanding frequent updates without bearing excessive operational costs, according to Kunkel.
Chainlink dominance fueled by broad adoption
Regardless of the rise in popularity of Pyth, Chainlink maintains its dominance within the field of Decentralized Finance (DeFi), by safeguarding high-value assets and leveraging its solid reputation for robust validator systems. This rephrasing aims to convey a clear message while keeping the text natural and easy to understand.
As I delve deeper into my research on Oracle infrastructure, it’s increasingly apparent that there are gaps that need to be addressed. The clarity around these voids suggests potential limitations in the conventional push approach. This is according to Kunkel’s insights from our recent interview.
“While Chainlink currently leads in total value secured (TVS), it lags in innovations such as a scalable validator set, the ability to maintain near-constant gas fees, and data transparency.
Chronicle market reentry and future expectations
Previously confined to MakerDAO, Chronicle was an early Oracle on the Ethereum blockchain. However, after its relaunch outside of MakerDAO in late 2023, it has expanded its reach by integrating with 10 new blockchains and attracting major industry players such as Morpho, Euler, Gnosis Pay, Coinbase, and Circle.
According to Kunkel, as the industry integrates more with conventional finance, opting for an Oracle partner becomes a crucial choice for risk reduction and management – a decision that financial institutions should consider making.
Oracles that have demonstrated success in areas such as security, resilience, transparency, and groundbreaking asset innovation are more likely to secure business opportunities.
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2024-10-30 13:14