Dec 12The oracle problem
One of the things that has been made clear with the proliferation of blockchain-based solutions, especially in the decentralized insurance space, is that smart contracts are powerful tools.
However, in order for smart contracts to work, they have to receive data, which often comes from external sources called oracles. This means smart contracts may be manipulated if the oracles they rely on have been compromised.
Adan Sanchez de Pedro of Witnet Foundation highlighted this problem during his presentation at the Decentralized Insurance Developer Conference (D1Conf) hosted by Etherisc in Prague.Adan Sanchez de Pedro at D1Conf “Without decentralized data brokerage, we cannot have smart contracts that make sense, are truly decentralized, and solve real problems in the right way.”— Adan Sanchez de Pedro, Witnet Foundation What’s being done about it?
A panel of blockchain experts, moderated by Ron Bernstein of Coinbase, further discussed the issue with oracles. The panel included Jack Peterson of Augur, Thomas Bertani of Oraclize, Doug von Kohorn of Rhombus, Sergey Nazarov of Chainlink, Julien Bouteloup of Flyingcarpet, and Adan.
The debate made clear that there is no single de facto solution to the problem and every organization has different approaches for ensuring the quality of oracles.
At Etherisc, ensuring the data quality from oracles is one of the utility functions of staking the DIP token. In parametric insurance, oracles act as gateways to the physical world, providing provable and reliable ways to transfer data to smart contracts, and they are rewarded by the ecosystem with transactions fees for their service. Data quality plays a crucial role for parametric insurance applications.
As other users earn fees, oracles working with Etherisc will have to...