Why another oracle?

Data oracles have become a prime target for attackers in the DeFi ecosystem, with significant financial losses stemming from oracle manipulation attacks. A report by Chainalysis shows that one in every three attacks on DeFi protocols in 2023 was linked to oracles, leading to annual losses of no less than $400 million. Source.

A key reason oracles are vulnerable is the economic tradeoff between attack cost and potential profit. The cost of launching an attack often depends on purchasing enough oracle tokens to influence the outcome or bribing node operators. This makes current oracle designs reliant on fluctuating market conditions, leaving them susceptible to unpredictable attacks. Moreover, as the Total Value Locked (TVL) of DeFi protocols rises, the financial incentive for manipulation increases.

The need for better oracle solutions becomes particularly pressing with the rise of Real World Assets (RWA). The tokenization of real-world assets like real estate, securities, and commodities requires accurate and tamper-resistant data to be fed on-chain. This expansion of the Web3 market demands new mechanisms that can reliably connect traditional Web2 data sources with blockchain technology.