The arrival of Smart contracts on the Ethereum network has opened up the blockchain to a
world of possibilities. A smart contract can be thought of as a unit of functionality you
upload to the EVM, Solidity is a high-level contract-oriented language with similarities to
Java and C languages It allows you to develop contracts that are compiled to EVM bytecode.
It is currently the flagship language of Ethereum. Although it’s the most popular language
library to be written for the EVM, it was not the first and probably will not be the last.
Despite the paradigm shifting features made possible by these contracts, the problem of
limited computation remains, as blockchains, by design, do not have data, they are merely
self-contained data structures with little to no capability to interact with other blockchains,
the Internet and the rest of the world. For this reason, contracts deployed on-chain have to
be carefully designed with extra consideration given to data stored and manipulated on
chain because of gas costs, which exist to prohibit the deployment and execution of wasteful
never-ending programs.
Transaction senders are required to include a gas limit that says how much they’re willing to
pay to have their transaction executed and whether or not a transaction executes is
determined by the amount of gas the sender is willing to pay. If the entire computation
exceeds the gas budgeted for a transaction, all steps are rolled back, and no part of the
transaction is executed. Consequently higher gas costs are unappealing to users, who have
to pay for transactions, thus disincentivizing the full scall adoption of blockchain based
application by consumers.
It is at this point that oracles step in, blockchain oracles serve as a bridge between the real
world and on-chain smart contracts by being a source of data that smart contracts can rely
and act upon. Oracles are critical in facilitating the full potential of smart contract utility as
without a reliable connection to real-world conditions, smart contracts cannot effectively
serve the real-world(the problem of gas costs).Information from the world encapsulates
multiple sources, so that decentralized knowledge is obtained off-chain. Hybrid smart
contracts (a coupling of on-chain code and off chain infrastructure) are made possible
because of these Decentralized oracle networks (DONs), where on-chain code and off-chain
infrastructure are combined to support more advanced decentralized applications (dApps)
that react to real-world events and interact with traditional systems.
The composition of a blockchain oracle varies based on what kind of data is being
handled(some are hardware dependent others are software dependent). Chainlink is the
industry standard for decentralized oracles because it overcomes both access to outside
data and the centralization of smart contract problems. A consistent gamut of off-chain
operations exist ranging from chainlink data feeds to functions.
1 Data Feeds are the quickest way to connect your smart contracts to the real-world data.
The data provided is of different types, namely Price Feeds, Proof of Reserve Feeds, NFT
Floor Price Feeds and L2 sequencer uptime feeds.
2 Chainlink VRF(Verifiable Random Function) is a provably fair and verifiable random
number generator that enables smart contracts to access random values without
compromising security or usability. For each request, VRF generates the random values
and cryptographic proof of how those values were determined, The proof is published
and verified on-chain before any consuming applications can use it.
3 Chainlink Automation enables conditional execution of smart contracts functions
through a hyper-reliable and decentralized automation platform.
4 Chainlink Functions provides smart contracts with a trust-minimized compute
infrastructure. Your smart contract sends your code to a Decentralized Oracle Network
(DON), and each DON’s oracle runs the same code in a serverless environment, your
code can be anything from simple computation to fetching data from API providers.
Oluijimi is a Blockchain Analyst. Can be reached at: Email- jimijay.oj@gmail.com.
Twitter- dafejay
By: JOSHUA OLUJIMI