TL;DR
Blockchain oracles can be likened to middle pieces that connect blockchains to real-world information. Binance Oracle does it by connecting smart contracts with trusted and verified data sources. Initially designed for the BNB Chain, it has the potential to extend to other chains in the future. Currently, this enables each project based on the BNB Chain to use and benefit from it. With Binance Oracle, developers no longer need to worry about data matters and can instead concentrate on other important aspects of their blockchain projects.
Introduction
Blockchain oracles are a critical building block of the blockchain ecosystem. Without them, smart contracts would have no way to obtain any real-world data. Binance Oracle is a blockchain oracle that enables smart contracts to access data sources in the real world required by blockchain applications. It ensures that smart contracts have the correct data at the right time.
What is a blockchain oracle?
Blockchain oracles are services that function as bridges between blockchains and the real world, enabling smart contracts to access data sources outside their native networks. In other words, they act as a link between on-chain applications and off-chain data.
As such, off-chain events can be conveyed into on-chain ones recognized by smart contracts. This information can be anything, from token or stock prices to the results of a football game, or a weather forecast.
Blockchain oracles can also verify if data is accurate, though they are not the data source itself. Instead, they are akin to an additional layer that collects and authenticates information and transmits it to the correct destination.
Blockchain oracles also allow people to use blockchains in contractual agreements. For example, you and your friend could bet on a football game in this way: firstly, both of you agree on terms and lock your funds in a smart contract. Secondly, the blockchain oracle will inform the smart contract of the game's result. Finally, after the game ends, the smart contract will release the funds to the winner of the bet.
There are different types of blockchain oracles, and one oracle can fall into multiple categories: software, centralized, decentralized, inbound, and outbound oracles. Essentially, how a blockchain oracle operates depends on the purpose for which it was built.
What is Binance Oracle?
A smart contract can't interact with external data without assistance. Instead, it relies on an oracle to feed it the necessary information. Binance Oracle is similar to other blockchain oracles in this aspect — it's a data service offered by Binance that strives to provide reliable and secure on-chain data to the blockchain.
Binance Oracle is currently purpose-built for the BNB Chain, but that doesn’t mean it can’t extend to other chains in the future. In addition, all the projects built on the BNB Chain can use its services.
The BNB Chain ecosystem benefits from Binance Oracle in many ways. Firstly, having a native blockchain oracle strengthens the trustworthiness of the blockchain data. Secondly, more reliable data leads to new possibilities for existing and new projects.
Finally, Binance Oracle can attract new developers to the BNB Chain ecosystem. It enables any developer to connect their BNB Chain-based projects to off-chain data, thereby saving them the hassle of maintaining the existing data, finding new sources, and risk using unreliable ones.
What solutions are on offer?
Blockchain projects depend on reliable data. Binance Oracle consists of four aspects that ensure the oracle is accurate, timely, and tamper-proof. Let's dive deeper into the Binance Oracle features that connect the BNB Chain to the real world.
Data sources
Binance oracle uses carefully selected data sources. This helps to determine that the information is accurate and its source trustworthy. For instance, Binance Oracle sources price data from multiple centralized exchanges (CEXs) and decentralized finance (DeFi) applications, and aggregates the data using a weighted average formula.
Data processing and signing
Binance Oracle has a data processing and signing feature that aims to make data tamper-proof. It has established a distributed signing system called the Threshold Signature Scheme and signs the latest data from different sources. Anyone holding a public key can verify the accuracy and authenticity of a digital signature, and no one can change the data without a set of private keys.
Data publishing
Data is published on the blockchain through multi-nodes that publish only signed information. The smart contracts that store data are secure and audited, and the multi-nodes can adjust the data publishing frequency according to different market conditions. This means accurate data can be obtained during high price volatility. The multi-nodes also ensure the reliability of data publishing, even in the most extreme scenarios.
Data monitoring
The data on Binance Oracle is kept up to date with an independent monitoring service that works 24 hours a day, seven days a week. It fetches prices from different data sources and compares them to published blockchain data. The Binance Oracle support team will intervene if a significant deviation is detected.
How to use Binance Oracle
If you have used blockchain applications, you probably don't need to learn how to use Binance Oracle. Where necessary, developers have already connected their applications to specific data. However, if you are a blockchain developer who needs to utilize Binance Oracle, the official manual will guide you through the integration step-by-step.
Closing thoughts
Blockchains would have less potential and fewer possibilities for mass adoption without oracles, as their information would be limited to their internal data. While blockchain oracles don't solve the problem of data availability, they can make available off-chain data on-chain using external sources.
Binance Oracle enables smart contracts to connect to all confirmed data outside its network. It uses a process to ensure the data is consistently correct, secure, and up to date. Binance Oracle has developed four solutions to ensure the data is reliable and constantly monitored for possible issues.