Blockchain technology is revolutionizing the way we interact, trade, and share information. Many experts predict that it will be the most disruptive technology in the next decade. Since the 19th and 20th centuries, after some structural innovations have been carried out, decentralization has made industries such as finance, media, and technology more transparent, efficient and free from intermediaries.
Traditional enterprises rely on a centralized closed structure. In contrast, decentralized financial projects are established based on the ethical orientation that management should be decentralized and democratized. Transitioning society to a decentralized platform can make many services safer, more accessible and more transparent than ever before. The growing interest in the decentralized field indicates a collective desire to have more control over the key elements of our lives, especially our financial situation.
Although decentralization can solve problems such as transparency and efficiency, the lack of a trusted central authority means that decentralized applications (DApps) must rely on third parties to provide data to perform transactions or application functions, such as loans. Access to reliable and trustworthy information, such as price information, real events, and identities, all form the basis of the reliability, strength, and efficiency of decentralized applications.
The security of protecting these data comes from the oracle solution. The solution can reliably and effectively connect the real world and off-chain information with decentralized applications and smart contracts in a verifiable and anti-manipulation manner. The global DApp has more than 1 million regular users, and there is a huge demand for reliable external data from the blockchain because it supports the security of DeFi applications and the current locked value of billions of dollars in this field.
After being hacked, attacked, and data manipulation, in the absence of mature corporate or government regulations, the challenge for blockchain technology is to establish a trust and secure system. Under such circumstances, new technologies such as data oracles are essential to establish a secure link between traditional companies with reliable price information and the decentralized ecosystem.
Connect the old and new systems
The data oracle machine acts as a bridge between decentralized blockchain applications by aggregating real-world data and connecting it with smart contracts. Then, when these decentralized applications use smart contracts that are automatically executed when certain conditions are met (such as clearing collateral), they need a price oracle. In the absence of centralized authorization, data oracles are essential to connect blockchain-based applications with the information required to execute these smart contracts.
Smart contracts and oracle technology have a wide range of use cases, involving insurance, real estate, healthcare, and the most important DeFi field. Security breaches in the DeFi field may endanger millions of dollars.
In DeFi, there are many examples of hackers. The data oracle is the input of the smart contract logic and therefore determines the behavior of the smart contract: output. If the data oracle input is incorrect, it will cause unexpected behavior in the smart contract, and may even lead to the loss of funds or other undesirable results, even in the most powerful DeFi projects. These structural issues make the widespread use of data oracles extremely necessary.
There is an urgent need to connect Web 2.0 to Web 3.0 to create a network that is more resilient, more efficient, and free from censorship. Traditional companies based on Web 2.0 are not yet structurally ready to transition to DeFi due to the need for learning curves, proprietary technologies, and organizational flexibility. These traditional enterprises will need a seamless startup process with a high degree of flexibility and customizability to act as a bridge to Web 3.0.
This is what the oracle technology will accomplish. It can provide enterprises with support and systems for the transition to Web 3.0 without the enterprises themselves having to worry about handling this process.
Despite the unstoppable development of DeFi in the past year, this field still needs to be widely adopted by the general public without professional coding knowledge. Only this accessibility can create a truly robust DeFi ecosystem.
Traditional enterprises will also benefit a lot from this transition, because with the continuous development of the decentralized industry, the data of these traditional enterprises is a valuable resource for decentralized applications and has become an innovative new revenue stream. The market share is also increasing.
Why we must incentivize traditional companies to join the blockchain
Many decentralized applications require real-time information, such as price information, sports event results, weather and news updates to be effective. Traditional enterprises that can provide reliable real-world data must connect with decentralized applications and commercialize these data through reliable data oracles to take advantage of this growing demand. For example, technology media giants such as Google and Bloomberg will benefit greatly from the use of data oracles.
This is an exciting step for the decentralized industry, because when large companies enter the DeFi field, it will add additional security and legitimacy to them. Correspondingly, this transition will also create additional sources of income for these mature companies in emerging industries. As the global adoption of DeFi, DApp, and smart contracts continues, traditional companies have no choice but to enter this field, or they risk being eliminated.
Directly connecting to data sources is the best way for companies to ensure data security and integrity, while enhancing the overall security of the DeFi field and the entire decentralized ecosystem. The oracle plays a very important role in this process and in building trust in DeFi and the broader blockchain industry.
The future is decentralized
We have seen that many large companies incorporate decentralized technology into their business models. Leaders in the DeFi field should participate in and guide these traditional enterprises to achieve major changes and development. The decentralized industry must prioritize usability, simplicity, and community education to accomplish the widespread adoption DeFi aspires to. The future is decentralized, and there is a lot of room for industry development. We are only at the beginning of the revolution.