As the key bridge between on-chain contracts and off-chain real-world data in the blockchain ecosystem, the importance of oracles is becoming increasingly prominent, and they are being upgraded from a single data relay tool to the "intelligence center" of the on-chain world. This report conducts an in-depth analysis of the oracle track. First, it explains the industry foundation and development context of oracles as the "intelligence center" of blockchain, and reveals why they have become the key to the trusted execution of smart contracts. Subsequently, through the combing of the market structure, the technical and commercial competition situation of traditional centralized oracles and decentralized emerging projects is compared in detail, highlighting the value reshaping brought about by the decentralization trend. In terms of potential space, the application of oracles has extended from the flow of financial information to the infrastructure of real assets (RWA) on the chain, pushing the blockchain ecosystem into a new stage. Finally, based on the structural trend analysis, the report puts forward investment suggestions, focusing on the three major directions of modular oracles, AI-integrated oracles, and RWA identity-bound oracles, emphasizing that oracles are turning from supporting roles to the "value anchor" of on-chain order, ushering in structural investment opportunities.
The essence of blockchain is a decentralized trust machine, which ensures the immutability of on-chain data and the autonomy of the system through consensus mechanism, encryption algorithm and distributed ledger structure. However, due to its closedness and self-consistency, blockchain is naturally unable to actively access off-chain data. From weather forecasts to financial prices, from voting results to off-chain identity authentication, the on-chain system cannot "see" or "know" changes in the outside world. Therefore, Oracle, as an information bridge between on-chain and off-chain, plays a key role in "sensing the outside world". It is not a simple data porter, but the intelligence hub of blockchain - only when the off-chain information provided by the oracle is injected into the smart contract can the on-chain financial logic be correctly executed, thus connecting the real world with the decentralized universe.
1.1 The Logic of the Birth of Information Islands and Oracles
Early Ethereum or Bitcoin networks faced a fundamental problem: on-chain smart contracts are "blind". They can only perform calculations based on data that has been written to the chain, and cannot "actively" obtain any off-chain information. For example: DeFi protocols cannot obtain the real-time price of ETH/USD on their own; GameFi games cannot synchronize the scores of real-world events; RWA protocols cannot determine whether real assets (such as real estate and bonds) are liquidated or transferred.
The emergence of oracles is to solve the fatal flaw of this information island. They grab data from the outside world and transmit it to the chain in a centralized or decentralized manner, so that smart contracts have "context" and "world state", which can drive more complex and practical decentralized applications.
1.2 Three key evolutionary stages: from centralization to modularization
The development of oracle technology has gone through three stages, each of which has significantly expanded its role in the blockchain world:
The first stage: centralized oracle: Early oracles mostly adopted the form of a single data source + central node push, such as early Augur, Provable, etc., but the security and anti-censorship capabilities are extremely low, and they are easily tampered with, hijacked or interrupted by failures.
Phase 2: Decentralized Data Aggregation (Chainlink Paradigm): The emergence of Chainlink has pushed oracles to a new level. It builds a decentralized data provider network through multiple data providers (Data Feeds) + node network aggregation + pledge and incentive mechanisms. Security and verifiability are greatly enhanced, and it has also formed the mainstream of the industry.
Phase 3: Modular, Verifiable Oracles (Verifiable & Modular Oracles): With the growth of demand and the emergence of new technologies such as AI, modular oracles have become a trend. Projects such as UMA, Pyth, Supra, RedStone, Witnet, Ritual, and Light Protocol have proposed innovative mechanisms including "Crypto-Proofed Data", "ZK-Proofs", "Off-chain Computation Verification", and "Custom Data Layer", which have enabled oracles to evolve towards flexibility, composability, low latency, and auditability.
1.3 Why is the oracle an "intelligence hub" rather than a "peripheral tool"?
In traditional narratives, the oracle is often likened to the "sensory system of the blockchain", that is, the eyes, ears, nose and tongue of the blockchain. However, in the current highly complex on-chain ecosystem, this metaphor is no longer sufficient: in DeFi, the oracle determines the "benchmark reality" of liquidation, arbitrage, and transaction execution, and data delays or manipulation will directly lead to systemic risks; in RWA, the oracle assumes the synchronization function of the "digital twin of off-chain assets" and is the only proof interface for the legal existence of real assets on the chain; in the field of AI+Crypto, the oracle becomes the "data entry point" for model feeding, determining whether the intelligent agent can run effectively; in cross-chain bridges and re-pledge protocols, the oracle also shoulders the tasks of "cross-chain state synchronization", "security guidance", and "verification of consensus correctness".
This means that the oracle is no longer just a "sensory organ", but a nerve center and intelligence network in the complex ecology on the chain. Its role is no longer "perception", but the core of the infrastructure to establish a consensus reality and synchronize the universe on the chain with the world off the chain.
From a national perspective, data is the oil of the 21st century, and the oracle is the channel controller for data flow. The network that controls the oracle controls the generation of "real cognition" on the chain: whoever defines the price controls the financial order; whoever synchronizes the truth builds the cognitive structure; whoever monopolizes the entrance defines the standard of "trusted data". Therefore, the oracle is becoming the core infrastructure in the DePIN, DeAI, and RWA modules.
Although the oracle is regarded as the "intelligence center" of the blockchain, the controller of this center in reality has long been in a state of "quasi-centralized" monopoly. Traditional oracle giants represented by Chainlink are not only the creators of industry infrastructure, but also the biggest beneficiaries of order and rules. However, with the rise of emerging trends such as modular narratives, DePIN paradigms, and ZK verification paths, the market structure of oracles is undergoing an explicit power reconstruction. The changes in this field are not simple product competition, but a philosophical confrontation over "who defines the reality on the chain."
The significance of Chainlink to the oracle track is similar to the symbolic status of Ethereum to smart contracts in the early days. It took the lead in establishing a complete network architecture based on the combination of data aggregation, node staking, and economic incentives, and became an irreplaceable "on-chain benchmark reality provider" after the DeFi summer. Whether it is financial protocols such as Aave, Compound, and Synthetix, or Layer 2 networks such as Polygon and Arbitrum, a large number of systematic operations are heavily dependent on Chainlink's data supply. However, it is precisely this kind of "indispensable" that brings two hidden dangers: one is the risk of single point failure of the on-chain system caused by over-reliance; the other is the transparency crisis and data censorship space brought about by implicit centralization. Although Chainlink's node network is nominally decentralized, its actual operation is often concentrated on a few validators, such as traditional institutional nodes such as Deutsche Telekom, Swisscom, and Blockdaemon; and its Off-Chain Reporting (OCR) mechanism, data source screening, update frequency selection and other decisions are mostly opaque and difficult to govern in a community. It is more like a central publishing system that inputs a "trusted version of reality" into the blockchain world, rather than a truly decentralized and censorship-resistant data supply market. It is this point that opens up a value breakthrough for latecomers.
The emergence of Pyth Network is a deep confrontation with the Chainlink model. Pyth did not copy the traditional data aggregation paradigm, but directly returned the power of data upload to the data source itself, such as exchanges, market makers and infrastructure providers. This "first-party data source upload" model greatly reduces the relay level of data under the chain, improves real-time and nativeness, and also transforms the oracle from a "data aggregation tool" to a "raw pricing infrastructure." This is very attractive for high-frequency, low-latency scenarios such as derivatives trading, perpetual contracts, and game logic on the blockchain. But at the same time, it also brings a deeper problem: Pyth's data sources mostly come from crypto exchanges and liquidity providers-these participants are both information providers and market participants. Whether this "both athlete and referee" structure can truly get rid of price manipulation and conflicts of interest is an unverified trust gap.
Unlike Pyth, which focuses on data sources and update efficiency, RedStone and UMA choose to take a different approach and cut into the structural layer of the oracle's "trust path" itself. The operating mechanism of traditional oracles is mostly based on "feeding price" and "confirmation", that is, the node uploads and broadcasts the data to the smart contract, and the contract directly uses this data as the status basis. The biggest problem with this mechanism is that there is no real "data verifiable path" on the chain. In other words, the contract cannot determine whether the uploaded data really comes from the information source specified off-chain, nor can it audit whether its path is complete and neutral. The "verifiable data packet" mechanism proposed by RedStone solves this problem: by encrypting the off-chain data into a data body with a verification structure, and unpacking and verifying it immediately by executing the contract, the certainty, security and flexibility of on-chain data calls are greatly improved.
Similarly, the "Optimistic Oracle" paradigm advocated by UMA is more radical. It assumes that the oracle itself does not need to provide absolutely correct data every time, but introduces economic games to solve disputes when disputes arise. This optimistic mechanism hands most of the data processing logic off-chain, and only returns to on-chain governance through the dispute arbitration module when objections arise. The advantages of this mechanism are extremely high cost efficiency and system scalability, which is suitable for complex financial contracts, insurance agreements and long-tail information scenarios, but its disadvantages are also very obvious: once the incentive mechanism in the system is not well designed, it is very easy for attackers to repeatedly challenge and tamper with the game manipulation of predictions.
Supra, Witnet, Ritual and other emerging projects are innovating in more detailed dimensions: some people build bridges between "off-chain computing" and "encrypted verification paths", some try to modularize oracle services so that they can be freely embedded in different blockchain operating environments, and some simply rewrite the incentive structure between nodes and data sources to form a "customized supply chain" of trusted data on the chain. These projects have not yet formed a mainstream network effect, but behind them reflects a clear signal: the oracle track has moved from "consensus dispute" to "trust path dispute", and from "single price provision" to a comprehensive game of "trusted reality generation mechanism".
We can see that the oracle market is undergoing a transformation from "infrastructure monopoly" to "trust diversity". Old projects have strong ecological binding and user path dependence, while emerging projects use verifiability, low latency, and customization as weapons to try to cut the cracks left by centralized oracles. But no matter which side we stand on, we must admit a reality: whoever can define the "reality" on the chain has the benchmark control of the entire crypto world. This is not a technical battle, but a "battle of definition rights." The future of oracles is destined to be more than just "moving data onto the chain."
The essence of the oracle is to provide "verifiable real input" for the on-chain system, which makes it play a core role in the crypto world that far exceeds data transmission. Looking back over the past decade, oracles have started from the initial “price feed” function in decentralized finance (DeFi), and are now expanding to a wider range of boundaries: from the basic data provider of on-chain financial transactions, to the central system of real-world asset (RWA) mapping, the bridge node of cross-chain interoperability, and even to the “on-chain empirical foundation” that supports complex structures such as on-chain law, identity, governance, and AI-generated data.
Infrastructure of financial information flow: In the golden age of DeFi (2020–2022), the main role of oracles is focused on “price feeding” - providing real-time prices of external market assets for on-chain contracts. This demand has driven the rapid development of projects such as Chainlink, Band Protocol, and DIA, and has also spawned the first generation of oracle standards. However, in actual operation, the complexity of DeFi contracts continues to escalate, and oracles are forced to "go beyond prices": insurance agreements require climate data, CDP models require economic indicators, perpetual contracts require volatility and volume distribution, and structured products require complex multi-factor data. This marks the evolution of oracles from price tools to access layers of multiple data sources, and their role is gradually becoming "systematized."
Furthermore, with the large-scale introduction of real assets such as off-chain claims, government bonds, and fund shares by projects such as MakerDAO, Centrifuge, Maple, and Ondo, the role of oracles has begun to evolve into trusted registrars of on-chain RWA (Real-World Assets). In this process, oracles are no longer just "pipelines for inputting data," but RWA's on-chain authenticators, status updaters, and executors of revenue distribution-a neutral system with "fact-driven capabilities."
The source of the credibility of on-chain RWA: The biggest problem of RWA has never been "technical difficulty", but "how to make the representation on the chain consistent with the legal and asset status off the chain". In traditional systems, this consistency is guaranteed by lawyers, audits, supervision and paper processes, while on the chain, oracles become the key to reconstructing this mechanism. For example, if an on-chain bond is mortgaged by an offline property, how does the smart contract know whether the property has been seized, appraised, rented, sold or mortgaged to others? All this information exists off the chain and cannot be natively on the chain. At this time, the task of the oracle is no longer simply "synchronizing data", but to build an "on-chain trust snapshot" by connecting government registration systems, IoT devices, audit processes and reputation mechanisms. It must constantly refresh this snapshot to ensure the consistency of the contract status with the actual status. This capability pushes the oracle to a more complex application boundary, and even requires the integration of legal, physical and political trust systems.
At the same time, we also see that RedStone and Centrifuge have cooperated to upload the cash flow, maturity status, default information, etc. of RWA assets to the chain in a modular data format, providing atomic input for transactions, risk control, and liquidation in the liquidity market. This data standardization and trusted update mechanism is almost equivalent to building an "audit chip" for the on-chain financial system, which is the foundation for the entire on-chain financial ecosystem to map to reality.
The "cross-asset layer" evolution of the oracle: Another trend worth noting is that the oracle is gradually evolving from the asset "data provision layer" to the "cross-asset coordination layer". Against the background of the rapid rise of cross-chain protocols such as LayerZero and Wormhole, the single-chain data barriers have begun to be broken, but there is still a serious gap in the synchronization of asset status. For example, a stablecoin on Ethereum may rely on the liquidation price on Arbitrum, while a structured product on Solana may involve the yield of RWA claims on Polygon as its underlying assets. This multi-chain interactive financial structure requires a "logical hub" to coordinate the acquisition, update, verification and broadcast of data. Future oracles, especially those structured oracles systems that support cross-chain deployment, off-chain collaboration and contract composability, will be more like an "on-chain API middle platform" - it not only provides data, but also has the ability to call, verify, convert, integrate and distribute, thus becoming the data intelligence layer of the entire Web3 application layer.
After the oracle gains stability on RWA, the next boundary will be the data mapping of "people" and "behavior". In other words, it will not only record the "state of things", but also capture "human behavior" - the on-chain credit system, DID (decentralized identity), on-chain litigation arbitration, and even the authenticity verification of AI-generated content will require "on-chain input ports with auditability". This direction has already begun to emerge in projects such as EigenLayer, Ritual, and HyperOracle: they either let the oracle verify the results of the off-chain model operation, or connect the AI model output to the on-chain element process, or let the auditor assume the factual responsibility in staking mode.
This trend shows that the boundary of the oracle has expanded from "financial information flow" to the entire data map of "on-chain order generation", becoming the infrastructure for the real world to move towards on-chain civilization. It is no longer just a mouthpiece for transmitting prices, but a digital bridge that links information, value and trust.
The technical maturity and industry attention of the oracle often show the characteristics of "non-linear cross-cycle" - after the public chain infrastructure enters the stock competition stage, it, as the core "data base" of the on-chain link to the real world, has ushered in a stronger strategic position. Whether it is the rise of Layer2, the implementation of RWA, or the combination of AI and on-chain computing, the oracle has become an unavoidable "trust anchor". Therefore, looking forward to the next three years, the investment logic of the oracle track will shift from "market value imagination in the hype stage" to "revaluation of cash flow value brought by structural growth."
4.1. Structural trends are clear, and supply and demand curves are re-matched
With the accelerated integration of traditional financial institutions and on-chain protocols, the asset status, legal status and behavioral status of the real world off-chain must enter the on-chain system in a structured, standardized and verifiable manner. This trend has brought about two fundamental changes:
The demand for high-frequency and customized data streams has risen sharply. Oracles are no longer simple price relay systems, but computing nodes that support a series of complex logics (such as automatic liquidation, income mapping, and state changes);
The "economic attributes" of data are more prominent, and its pricing model has gradually transitioned from "Gas cost + node incentives" to "B2B enterprise-level subscription + SLA data agreement + commercial contract responsibility", forming a stable cash flow.
The transition of supply and demand directly drives the project valuation model from "narrative driven" to "income driven", and also provides a new investment anchor for long-term holders and strategic funds. Especially for the top RWA projects, AI computing chains, and DID architectures, choosing a reliable, stable, and high-throughput oracle service provider is an irreplaceable reliance at the contract level.
4.2. Three key directions have long-term Alpha potential
Under this new development paradigm, we suggest focusing on three types of oracle development paths, which represent the extended capabilities of the oracle as the "intelligence hub" on the chain in different dimensions:
1) Modular, application-side native oracle: close to business means close to value: Compared with the traditional "general" oracle model, new generation projects such as RedStone, PYTH, and Witnet emphasize "on-demand service" and "on-site deployment", embedding oracle logic into the application contract or VM layer. This model can better match the needs of high-frequency trading and structured asset protocols, and also make data transmission faster, response more accurate, and cost lower. The advantage of such projects is that they have natural "product-protocol" stickiness. Once a DeFi or RWA project selects a certain type of oracle, its migration cost is extremely high, which means medium- and long-term binding income and defensive moat.
2) AI and oracle fusion narrative: interface layer for verification, filtering and fact generation: As AI models are widely involved in the crypto ecosystem, how to verify the authenticity of their generated content, behavior predictions and external calls has become an unavoidable basic issue. Oracle is the "logical anchor" of this problem: it not only provides data, but also verifies whether the data comes from a trusted computing process and whether it satisfies the multi-party consensus mechanism. Projects such as HyperOracle, Ritual, and Aethos have begun to try to provide "provable AI call results" for on-chain contracts through zkML, trusted hardware, encrypted reasoning, etc., and connect to the chain in the form of oracles. This direction has high technical barriers and high capital attention, and is a potential detonation point for the next round of high Beta.
3) RWA and identity-bound oracles: off-chain legal status mapper: From the asset universal message standard of Chainlink and Swift, to the synchronization of multi-asset income status on Centrifuge, to the introduction of a third-party evaluation model by Goldfinch, RWA is rapidly building a trusted mechanism that relies on a "neutral information layer". The core of this mechanism relies on a oracle system that can trustfully put off-chain laws, asset registration, behavioral credit and other content on the chain. This type of project is more "infrastructure" logic, and the development path is highly related to regulatory policies, but once an industry standard is formed (such as Chainlink's CCIP), it has an exponential network effect and is a "grayscale consensus asset" suitable for long-term layout.
4.3. Reconstruction of investment logic: from "feed price narrative" to "on-chain order" pricing
In the past, the market often regarded oracles as "ancillary tools for DeFi hot tracks", and market value assessments and investment behaviors mostly fluctuated with the market. However, in the future, the oracle itself will gradually acquire an independent value assessment mechanism. The reasons are: it plays an irreplaceable role as an injector of facts in the on-chain protocol; it has a stable and calculable source of protocol revenue (such as Chainlink's data pricing model has formed a B2B business subscription logic); it undertakes the underlying information coordination tasks in multiple structural growth tracks such as RWA, AI, and governance, which has a multiplier effect.
Therefore, we suggest that investors should not only evaluate projects from the perspective of "market value size" and "trading heat", but should screen oracle assets with long-term value potential from the following three main lines: whether they have native deep binding with protocols, chains, and financial institutions; whether they have established a business closed loop of "data-fact-consensus"; whether they have scalability advantages in the next generation of scenarios (RWA, AI, cross-chain).
In summary, the oracle is no longer a supporting role on the edge of the encrypted narrative, but is gradually becoming the "fact benchmark system" and "order generation engine" of the on-chain world. Structural opportunities have already formed, and investment logic needs to be reconstructed urgently.
The oracle track is standing at the forefront of the evolution of the blockchain ecosystem, and plays a core role in bridging the information between the on-chain world and the real world. With the increasing complexity of on-chain applications and the demand for real assets to be on-chain, oracles are no longer just providers of price data, but have become the "intelligence center" and "order generation engine" for the trusted execution of smart contracts. The multi-dimensional improvement of technology and the in-depth expansion of application scenarios have brought unprecedented development space and value reassessment opportunities for oracles.
In the future, oracle projects will develop in a more decentralized, modular and scenario-based direction. The integration of AI and on-chain data and the on-chain process of RWA will inject continuous growth momentum into them. Investors should examine the value of oracle projects from three dimensions: on-chain protocol binding, closed-loop business model, and scalability, and focus on innovative forces with long-term moats and structural growth potential. Overall, the oracle track has gradually shifted from a supporting role to the "intelligence center" of the blockchain world. Its ecological value and investment opportunities cannot be ignored, and the era of structural dividends has arrived.
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