A blockchain can verify all the elements present on its network. However, it cannot access elements that are external to it. Oracles aim to address this problem. An oracle is an actor that enables a blockchain to communicate with the outside world.
One of the use cases for oracles is the "price feed" in DeFi. This involves transmitting the price of the assets they integrate to the DeFi protocols. This is, for example, necessary for a lending protocol that needs to know when to liquidate its users' loans.
There are two interesting measures for an oracle: total secured value (TVS) and secured volume. TVS takes into account all the value deposited on the protocols based on this oracle, while secure volume measures the volume of trading on the protocols that incorporate the oracle.
Some protocols rely on several oracles in parallel depending on their needs.
The oracle sector is innovating more and more and extending to new and increasingly specific use cases.
Chainlink: the oracle pioneer Launched in early 2019, Chainlink has become the first global oracle, succeeding Chronicle, which was exclusively dedicated to MakerDAO.
With a Total Secured Value (TSV) of $23 billion, Chainlink dominates the oracle market. Aave alone accounts for $11 billion, more than half of this TVS. (Follow in real time on DeFiLlama)
Chainlink's core strength lies in the trust it has built over time with the largest applications in decentralised finance (DeFi).
Chainlink has gradually expanded its focus beyond price feeds in DeFi, moving into blockchain interoperability and proof of reserves for Real World Assets (RWAs).
However, Chainlink's relevance in the area of blockchain interoperability remains questionable, particularly when compared to specialist solutions such as Wormhole, LayerZero and Hyperlane.
To explore this topic further, see our analysis of interoperability solutions.
Chainlink has forged an image as the most institutional oracle. However, this institutionalisation has been accompanied by a degree of stagnation in certain aspects of its offering. In the face of this, a number of innovative projects are emerging, seeking to capture their share of the market.
Pyth: accelerating oracles Under the historical "push" model, the oracle publishes and verifies on-chain price movements at regular intervals or when certain specific thresholds are reached.
Pyth has introduced a new oracle model called "pull", where users retrieve price movements as soon as they wish.
Pythnet is a blockchain where data providers publish prices which are then aggregated to obtain an average price. Participants in the network attest to the validity of this price and send it to Wormhole, an inter-blockchain communication protocol. Wormhole then transmits this price to the Pyth instances deployed on the various blockchains. The protocols on these blockchains can then claim the price at any time.
The pull model therefore relies on a continuous flow of data that can be used as soon as a user needs it. This enables prices to be updated with much lower latency than the "push" model.
Another advantage of the "pull" model is its ability to offer all the price streams supported by an oracle on each channel where it is deployed. In contrast, the "push" model must deploy a specific stream on each chain, which hampers its ability to scale as the number of streams and chains increases.
Pyth has been widely adopted by most of the Solana, Sui and Aptos protocols, as well as some of the new protocols in the Ethereum ecosystem. Currently, Pyth is the oracle with the highest secure volume.
Recently, Pyth announced a staking programme for its token. This initiative aims to benefit from real cryptoeconomic security, conferring real utility on its token.
RedStone: the oracle for yield tokens RedStone is an oracle specialising in token price streams with built-in yield . In particular, it focuses on liquid staking and restaking tokens, as well as stablecoins with yield. These feeds are then exploited by applications integrating these tokens, such as Pendle and Morpho.
RedStone is also developing its own service (AVS) on EigenLayer. This new 'push' model checks the validity of data transmitted by Redstone off-chain rather than on-chain, reducing operational costs. If the off-chain validation proves to be incorrect, the validator's capital is 'slashed'. This innovative model therefore relies on the economic security provided by EigenLayer.
Since the beginning of 2024, Redstone has seen rapid growth in its Total Secure Value (TVS). This growth has been driven by the provision of price streams for popular tokens, such as Etherfi's weeth or Ethena's sUSDe.
To explore this further, see The Big Whale's interview with the Redstone team.
Stork: the free market in data Stork is turning the traditional oracle model on its head. Its main innovation: allowing anyone to become a data provider, without the approval of a committee.
Data-consuming applications have two options: interacting directly with providers or using composite oracle services (COS). These COS offer applications the ability to deploy their own oracles with a few clicks, selecting providers, data types, update frequency and validation method.
So, Stork is not an oracle in the strict sense, but rather a data marketplace where applications can easily create their bespoke oracle.
Stork thus creates a truly free market, eliminating the intermediaries between consumers and data providers. This approach reduces costs, offers a greater diversity of data and achieves extremely low latency.
Thanks to its extremely low latency, Stork has been adopted by many derivatives trading platforms, where the speed of price updates is crucial.
Although Stork only secures $200 million, it rivals Chainlink in terms of volume secured over the last 7 days, both reaching $5 billion.
Stork, the newest of these oracles, has only been available since mid-2024. It will therefore be interesting to follow its development and see whether it manages to deliver on its promises of very low latency while ensuring a sufficient level of security.
Edge: real-time risk management Edge, announced in September 2024, is the brainchild of Chaos Labs, a company specialising in helping DeFi protocols - such as Aave - to manage their risks.
Going beyond simply broadcasting price streams, Edge aspires to transmit a range of crucial information in real time, paving the way for dynamic and proactive risk management.
This contextualisation of price streams allows protocols to dynamically manage their risk parameters. This eliminates the friction associated with governance votes and enables real-time reaction.
Currently, Edge only integrates prices for 5 trading pairs and is only implemented on the Jupiter protocol. Its deployment is planned on GMX and Radiant.
The market maker Wintermute has also announced the integration of Edge to create its own "Outcome Market".
Oracles are indeed essential elements for predictive markets, a rapidly expanding sector.
UMA: the optimistic oracle UMA, a long-established oracle, has recently regained popularity thanks to the success of Polymarket, which uses it.
UMA is an optimistic oracle, which means that it considers the information transmitted to be accurate by default. However, it is possible to dispute information, triggering a vote of UMA validators to decide the issue.
Polymarket, a platform for betting on various events, including the US elections, uses UMA as an arbiter to resolve disputes when closing bets. It is important to note that Polymarket's team retains the final say if UMA's decisions do not suit them.
UMA has other use cases, such as verifying transfers between blockchains via the Across protocol, developed by the same company: Risk Labs.
Read our analysis of Across
UMA has also developed Oval, a mechanism for recovering extracted value (MEV) during liquidations on decentralised lending applications. For example, UMA has teamed up with RedStone on certain Morpho vaults.
The aim of Oval is to enable a position to be liquidated under the best possible conditions by organising an auction on the liquidation price, thereby minimising losses for users and protocols.
Conclusion The oracle market has long been dominated by Chainlink, which had no real competitors. Today, new players are emerging with different models, often more specialised, meeting more specific needs than a generalist oracle.
Changes are relatively slow because DeFi applications cannot afford to test new oracles without them being tried and tested, particularly for the large historical DeFi applications.
Chainlink is trying to maintain its position in the price flow sector by also rolling out a new version of its oracle based on the "pull" model.
Chainlink is focusing largely on institutional players, particularly with its proof-of-reserve functionality for the Real World Assets (RWA) sector and interoperability between blockchains, aiming to connect public and private blockchains, for example.
Oracles are covering increasingly broad sectors, acting as trusted intermediaries for crypto applications. However, this trust also represents a point of vulnerability for protocols that rely on oracles.
Almost all oracles are still fairly centralised, both in terms of the data providers and the actors who attest to the integrity of this data. Pyth and UMA are pioneers in decentralising their operations and capturing value through their tokens. Chainlink initiated its staking programme last year, but only a small amount of LINK has been put into play so far.
