In the past months we have entered into what seems like the opposite of a crypto winter, and more like a crypto renaissance as DeFi exploded and a massive amount of institutional interest in Bitcoin and Ethereum as asset classes took hold.
While it took the better part of 10 years for the alternative asset class use case of blockchain to stick — perhaps as best-evidenced by Mass Mutual buying $100M of Bitcoin — we believe that the use case of blockchain to drive decentralized data economies on a global scale will take less time, and have potentially a larger (size of global data economy was $3T in 2017) and more dynamic impact (data is transacted and used much more frequently and in many more application scenarios than asset classes): likely 5–7 years to maturity, and we believe the time and context to begin building for this type of world is, respectively, now and on Polkadot.
The necessary conditions for solving The Oracle Problem have been around for many years — ie we knew we needed to solve it, and many projects have worked incredibly hard to do so, mainly in the context of Ethereum. However, there’s a fundamental misalignment of incentives when it comes to the operation of feeding off-chain data on-chain: it costs something. It should be the other way around; actors should be paid to provide information.
In addition, if you do somehow manage to get incentive alignment for data feeding — the largest current use-case of which in the crypto world today is price-feeding services for DeFi projects — you’ve got to have the capacity to drive a huge amount of throughput. We know that the network congestion (and high gas costs) we see on Ethereum have been major technical obstacles to type of scaling needed for many different DApps, and this includes the necessary throughput for economical price-feeding solutions.
Therefore, the necessary conditions to solve for getting real world data on-chain have been evidenced by the attempts to solve it by other projects in a manner that will not be technically or practically feasible in the long run — even only in the narrow capacity of price-feeding various Ethereum-based DeFi applications.
However, Kylin Network felt we needed a better technical framework by which to sufficiently solve for The Oracle Problem; and, through Polkadot, we believe we have found that framework.
Currently, we feel the narrative of using an ‘Oracle’ may be far greater than practical usage due to cost and also due to the long-term viability of using them; current oracle services are expensive, and we believe they don’t need to be. We can solve for The Oracle Problem while opening up even more exciting avenues.
In this way, price feeds as an ‘oracle service’ are very much the email of the early to mid 90s —“when the internet went live in 1991, email was primarily used by universities or for corporate communications. The general public saw it as a novelty and still too expensive for everyday use.
On July 4, 1996, Hotmail launched the first free, web-based email service. In doing so, they opened up a direct line of communication to potentially 20 million American internet users.”
We expect the same transformation in the frothy oracle space over the next 5 years, where oracle services, once the specialized and expensive purview of burgeoning DeFi applications, will become pervasively accessible, and cheaply attained. The main value won’t be contained within oracles as they are narrowly viewed, it will be in engendering the context for a global, decentralized data economy, of which price-feeding oracle services will be just one — albeit a foundational and important (like e-mail)— component.
Therefore, as we have intimated, the price-feed/oracle use case is just one small sub-section of a global decentralized data economy. There are a multitude of use cases that will come to fruition — some conceivable, like flight insurance smart contracts, blockchain gambling, and some not so conceivable, encompassing the vast territory of imaginative ways that businesses, projects, DAOs, etc., can monetize and consume data.
This is all possible, again, because of the ‘metaprotocol’, layer 0, of Substrate/Polkadot, as it provides a technically innovative way to scale such a system that we have never before had at our disposal, and as our CEO, Dylan Dewdney, has discussed plainly in interviews, adding:
“The issue is technical — it’s a sequential chain on Ethereum: everyone is in line to get their lunch at the cafeteria, which tries to serve a variety of ‘just ok enough’ food at once to the broadest possible audience (and as anyone who has tried the meatloaf will know, it’s ok, but nothing amazing). The ‘parallel-ness’ of Polkadot is more like a bunch of food trucks that share a power source and a parking lot and serve each person in a specific way to their needs: taco truck, burgers, Chinese, etc. etc.”
Technically, then, the path is now clear for us to sufficiently solve for The Oracle Problem, in addition to opening the way for an entirely new and innovative universe of use cases under the overall framework of a global, decentralized data economy.
Go forth Kylians!
About Kylin Network
Kylin Network aims to build a cross-chain platform powering the data economy on Polkadot. It will be the data infrastructure for the future DeFi and Web 3.0 powered by Polkadot. Kylin Network will provide valid, reliable, secure, cost-effective, and easily-coordinated data sources and data analytics.