The Evolution Of Blockchain Oracles And Data Feeds

source

The content of my article today is on blockchain oracles and data feeds especially on its evolution over the years, I will like to share some ways they have have been envolving over time, what it was like before and how it is now and hopefully that would provide us with some insight about this.

So below is a breakdown of the evolution;

Early Blockchain (Pre-Oracles)

During the pre-oracle era when they are not much blockchain network available infact then they were just few available like the oldest coin blockchain Bitcoin and that of Ethereum the second biggest cryptocurrency and then the way they operate was in such a way that the data available onchain was not merely enough it was like they were enclosed unable to have any interaction whatsoever with external data.

The earliest blockchain would have been seen as rather a closed system due to the fact they only utilise data Onchain and unable to do more than that and for this reason that's the fact there isn't interaction with external data it also means that at the time blockchain available were used to only simple transactions.

Lack of external data interaction with the blockchain in the pre-oracle era meant transactions done were simple transactions and ofcourse it greatly limited it's smart contract ability to ensure the information there are updated real world events happening on real time.

source

First Generation Oracles

Well the first generation oracle began around 2015-2017 and the purpose of this oracle stems from trying to ensure there are external data on blockchain, this was the reason or the purpose that drive the creation of the first blockchain oracle and mostly then it was centralized oracles.

In the first generation it was like this the source of this external data's were centralized, hence that meant blockchain had to rely on them to provide it with the external data it needs which helps the smart contract to execute based on real world events happening in real time so the first generation oracle kind of helped eased things for blockchain even though a problem still persisted.

As much as this single entity provided blockchain with the data it needs the issue lies on the fact that they are centralized entity as such it could never be completely trusted and it could also be manipulated since it's centralized which means information it provides are not immutable, do first generation oracle helped solve a problem but there still remains an issue.

Decentralized Oracles

Then with time during the 2017-2019 period then a new oracle was introduced an oracle different from the centralized first generation oracle and this was a decentralized oracle. Well what's the purpose why was this introduce? Well the goal was to solve the issues raised by the first generation oracle which was hugely centralized.

So security which was a concern and trust and manipulation of data's which were all and issue in the first generation oracle was solved by the decentralized oracle and they are not centralized because their data source has multiple nodes and it makes the information it sends to blockchain to be more trust worthy it didn't just rely on one source of information like centralized oracle but had multiple sources which helps for easy validation.

An example of this decentralized oracle is chainlink and they were used to great effects in many defi platforms and even gaming it was introduced around 2027 and they help provide blockchain with data's that are trusted hence making it very reliable oracle and much preferred than the first one.

Layer 2 Oracles & Off-Chain Computation (2020-Present)

Then we have the layer 2 oracles and the offchain computation, well why was there a need for this? Was the decentralized oracle not enough? Well the need for offchain computation and layer 2 oracles grew with more mass adoption of blockchain.

As more and more people started to use blockchain then a need arises for improved scalability and that was only offered by layer 2 oracles as they offer a much more faster data to blockchain which they do efficiently, it's computation it's done offchain and then the results of such computation is then sent to layer 1 and the layer oracle is not only faster than the decentralized oracle but also cheaper yes despite the offchain computation.

Layer 2 oracles made it possible for us to have access to real time data and infact this data's are being used in finance for prices in the market and even in lotteries, it's usecase spans a wide range both in gaming and real world events and defi has found great use for layer 2 oracles.

source

Conclusion

This is just a brief evolution breakdown of how we went from the pre-oracle era to the first generation oracle which was centralized then onto a decentralized oracle and then the layer 2 oracles which is an improved version of both and still present in our time, we should really take the time to appreciate this technological advancement.