The Web 3.0 revolution has arrived, with an avalanche of Web 3.0 decentralized applications developing at an alarming rate.
Decentralization is at the heart of Web 3, and the introduction of blockchain technology plays a key role in displacing Web 2 to Web 3.0.
According to a Reuters article, more than 3,000 decentralized applications on the Ethereum blockchain confirm the rapid adoption of cryptocurrencies and DeFi over the past decade.
Furthermore, the introduction of smart contracts was an important factor in the rapid growth of the DeFi industry. Smart contracts are computer programs that run on a blockchain to automate a series of transactions when certain conditions are met.
As a result, smart contracts help the decentralized blockchain industry by allowing transactions to happen automatically and without third party intervention.
Smart contracts can also be used for record protection, transaction settlement, diagnostic testing, supply chain implementation, real estate sales and governance, to name a few applications. This article will examine the Oracle protocols in the Web3 space, their current security flaws, and how these oracles can be improved.
Importance of Oracles in the Web 3
As tempting as the concept of Web 3.0 is to be a self-contained, permissionless and trustless Internet model, smart contracts cannot automatically access and handle updated information and real data without an Oracle.
This demonstrates the importance of the Oracle Protocol in blockchain technology and the long-term sustainability of the DeFi sector.
Oracles are third parties, and bringing them into one transaction can expose what was previously a direct transaction to outside influence.
Furthermore, according to Cryptopedia, there are protocols for smart contracts in the blockchain industry to interact with oracle external data.
Current security flaws in Oracles
One of the major problems is the centralization of the Oracle protocol. To put this into perspective, in 2021 alone, hackers stole more than $1.3 billion through Oracle and Bridge hacks, resulting in security flaws in existing Oracle protocols, because hackers contained single points of failure in these Oracle protocols. take advantage of.
Furthermore, the vast majority of Oracle protocols are decentralized in name only, as hackers use their centralized servers to attack decentralized applications that integrate these oracles on-chain.
These security loopholes have proved to be very costly for the blockchain sector and need to be addressed in a timely manner to provide maximum security to users.
Decentralized Oracle Protocol as a Gamechanger
These exploits and security flaws led to the development of decentralized oracles, which operate similarly to blockchains using distributed ledger technology to strengthen security and reduce hacks due to the centralized oracle protocol.
The decentralized oracle approach has proven to be highly effective in securing smart contracts and enabling seamless off-chain data verification while providing maximum asset security and resistance to hackers.
Decentralized protocols such as , and the Witnet protocol, have come a long way toward addressing the issues of hacking and decentralization by promoting untrusted and permissionless access to on-chain data, thereby securing smart contracts. The QED protocol is also worth noting.
Since security and decentralization are at the forefront of its operations, introducing QED aims to solve the problems inherent in existing oracle and blockchain systems models.
QED was the first to issue QED tokens to oracles on its protocol to achieve full decentralization. Oracles can use the token to run and own a part of the platform.
The QED token system has helped establish accountability and eliminate the risk of collusion in the ecosystem. On the other hand, the Oracle of the Platform can only determine the fees required to fulfill the contract and cannot make other arrangements.
DelphiOracle is the most popular Oracle on WAX-io, with over 1400 actions per hour. QED is a battle-tested and proven iteration of the Delphi Oracle that has been in service for over 3.5 years.
On the QED protocol, every financial transaction is fully decentralized and trustworthy.
Furthermore, the QED protocol is blockchain agnostic, which means it can be integrated and scaled with any publicly available blockchain.
QED utilizes distributed ledger technology to maintain its commitment to a decentralized oracle solution. Furthermore, QED’s innovative approach to the decentralized oracle sector has established it as the ideal solution to the sector’s flaws.
QED’s economic model sets it apart from existing Oracle protocols because it focuses on both the technical and commercial sides, both of which are critical for smart contracts to distribute and collect real-world data.
closing thoughts
Due to their blockchain technology, decentralized oracles are the way forward for the adoption of Web 3.0 applications.
Although Web 3.0 is undoubtedly a potential disruptor of the current state of the Internet, Web 2.0, with the help of decentralized oracles, has the potential to make it a reality.