The automated implementation features of decentralized applications (based on smart contracts) have enormous potential and practical importance. In traditional companies, subversive innovation would occur if the central brokers were replaced by trustless smart contracts. In the Web-2.0 era, the most profitable enterprises in data storage, analysis, and distribution are centralized enterprises. The decentralized network, in the Web3.0 era, can produce a paradigm shift that allows users to regain their own data and to gain real Internet predominance.
Decentralized applications (dapps) still rely on external data sources, which run confidentially. Due to unique consensus models, blockchains are unable, through active initiation of a network call, directly to import real-world data and information.
Thus, while the external data interface is arranged for the direct import of data on the chain, these data are not accepted because the consensus cannot be reached. Currently, smart contracts have no easy way to access reliable real-world data, which reduces their applications. Current decentralized applications still rely on centralized data services for the delivery of data, meaning that data level security, privacy, and decentralization of the oracle is questionable, including:
  1. 1.
    Data Access
Smart contracts cannot alone store data. There is no built-in mid-layer query for decentralized applications to receive and check real-world data efficiently and accurately. There will be obstacles to developing and implementing decentralized applications based on oracles before decentralized applications can use simple methods for calling and obtaining real external data input.
2. Data Reliability
The oracle has the ability to define the feedback and behavior of the smart contract when the external data input is manipulated. If the oracle is disordered, then smart contracts and all systems which rely on these contracts are affected, which eventually leads to safety vulnerabilities for the entire Platform.
In a fully decentralized network, economic incentives must be added to prevent the destruction and attacks on key data sources by others. DAPP applications will face major risks before establishing a robust incentive mechanism to guarantee high-quality and reliable data resources.
In short, distributed and decentraliZed technology is an effective means of resolving the stirrings of the centralized businesses, and it is impossible to underestimate its market potential in combination with oracles. Most of the decentraliZed oracles on the market currently focus on Defi and there are not enough funds to be adapted, i.e. the compatibility of the universal system is not high. The privacy and safety of the user is also a remarkable issue. The leakage of user's personal information is a fatal breakdown, in particular in the financial and prediction markets.
Last modified 1yr ago