Oracles are an extremely important part of the blockchain, without them, dApps wouldn’t be able to retrieve external data to verify transactions. But what exactly are they? Oracles are third-party services that provide external information to smart contracts. They work as a bridge between blockchains and the outside world. By themselves, blockchains and smart contracts cannot access information that is outside of their network. This is an underlying issue, as without the relevant information from the outside world it’s difficult to form new contracts and agreements. As a result, blockchain oracles were created to overcome this problem.
Oracles help to create a link between off-chain and on-chain data. By doing so, they allow smart contracts to apply to a wide range of applications. Without them, smart contracts could only be implemented based on the data within a specific network, leaving networks with very few uses. Several types of oracles exist, however how they operate will be based on what the oracle was designed for. They are classified based on several qualified including:
Source- whether or not the data comes from hardware or software
Direction of information- is it inbound or outbound
Trust- is the source centralized or decentralized
Few oracles will fall into a single category, with multiple operating across several. For example, an oracle may source information directly from a business website. This would be a centralized inbound software oracle.
It’s important to note that oracles are not actually data sources. They’re a layer that solves queries, verifications, and authentications when it comes to external data, which is then relayed. This data can come in many different forms, including but not exclusive to the completion of a payment, price information or the measurement of a sensor. Some oracles will also have additional responsibilities, such as relaying information to smart contracts and back to external sources.
At the moment, the barrier to entry for new projects is extremely high. Projects need to use Ethereum-based smart contracts which can be expensive, with gas fees being higher than the entire operation. To make things even worse, gas fees can fluctuate considerably from one week to the next. This means that a DeFi service built on the Ethereum mainnet will have to deal with different operating costs from day to day, making it almost impossible to budget or plan for the future.
CRD is looking to change this, reducing the barrier to entry for new dApps (Decentralized Applications). To provide a solution, CRD has built on the Ethereum mainnet to solve transactions at a more stable rate and with lower fees.
So how will they do this? CRD will start by settling locally when possible. They will also put external transactions into “packages” instead of separate transactions, which will dramatically decrease overall costs. CRD are also forward thinking in their approach, making sure dApps are legally compliant. With cryptocurrency regulations becoming stricter, barriers of entry will continue to increase for new dApps. Though this is an issue, recent scams such as the $SQUID cryptocurrency have shown just how important regulation is in the industry. CRD makes this possible through a plug-and-play solution that allows users to become and remain KYC compliant. This innovative technology will allow new dApps to be able to withstand the coming crypto regulatory crackdown and remain profitable.
All dApps require open communication with blockchains to operate. Without this communication, dApps are unable to access information and make transactions on the blockchain they operate on. This communication is maintained through nodes, however underlying fees and complications make it extremely difficult for upcoming dApps to survive. CRD are looking to change this, ensuring fees and transactions aren’t a major issue for new dApps in the industry with their CRD node.
The CRD nodes compliant infrastructure enables interoperability between onchain and offchain transactional and data and is blockchain agnostic, meaning the solutions can apply to different underlying blockchain technologies. With this solution, new dApps will be able to overcome the problem of high fees, allowing their project to get off the ground no matter what blockchain they’re built on.
Another application includes legal requirements. With a plug-and-play solution, CRD will allow upcoming dApps to meet all current and upcoming KYC regulations across blockchains. It would allow decentralized protocols to access offchain data such as credit score, transactional data, and proof of assets around a specific wallet address. It would also mean that after passing their KYC once, users would have access to all decentralized protocols without having to pass the KYC multiple times.
After the events of 2021, it’s fair to say that dApps and DeFi are likely going to be the future of our systems. However, we still have a long way to go. At the moment the market is currently difficult for new dApps to penetrate. This means that only founders with enough funds at the start of a project are going to survive. It also leaves the market prone to monopolization, with a select few organizations running everything (much like Bitcoin in the current crypto market).
In addition to this, we also have the issue of regulation. Although nodes are a great way for blockchains to access data, they don’t provide any security for users. With regulations around the world becoming significantly stricter, new dApps will need to become compliant in order to succeed. DApps that fail to do so will likely fail in the long run.
As the dApp market continues to grow, a wide variety of technological developments will come with it. With each development, we see the boundaries of the dApp world pushed to new levels, with innovative technologies changing the way we interact throughout DeFi. Over the next decade, as dApps become the new norm, it’s likely that many of these new technologies will become an important part of our daily lives, with new tech making it easier for dApps to be adopted on a mass scale.