Recently, the oracle track is heating up again, and I want to have a good chat about this topic.

Many people actually have misconceptions about oracles. They are not really making predictions—they act as an information bridge between the blockchain and the outside world. Think of a blockchain like a computer that’s lost its internet connection: its internal data can be just as secure and reliable, but it simply can’t obtain off-chain information on its own. That’s where oracles come in. Like Hermes from Greek mythology, they transmit information between two worlds.

Why are oracles so crucial? Because most real smart contract use cases can’t do without off-chain data. In finance, they need to provide asset prices; in trade, they need to verify contracts and signatures; in logistics, they need to connect to IoT data. Without oracles, the blockchain can only keep records—other than that, it basically has no chance.

An oracle’s core work includes several parts: providing reliable external data to smart contracts, verifying the accuracy of that data, ensuring the security of the entire system, handling complex off-chain computation, and even providing unpredictable random numbers for decentralized games. Another very important component is the node incentive mechanism, which uses staking, rewards, and penalties to ensure that data providers remain honest.

But there are risks too. The most common one is a price-feeding attack. Attackers may manipulate the data sources to influence the information an oracle provides. For example, in the flash-loan attack incident involving a certain large exchange in 2020, the attacker made profit of about $34 million by manipulating the oracle’s prices for feeding—working together with a flash loan. There are also various other methods, such as man-in-the-middle attacks, front-running attacks, and selective disclosure.

The good news is that more and more oracle projects are now shifting to decentralized governance solutions to reduce the risk of a single node being hacked. That’s also why this track has recently been getting more attention again.

As for specific projects, the long-established LINK is still here, with the latest price around 9.45 dollars and a 24-hour increase of about 3.33%. But there are also plenty of newcomers now—for example, PYTH is around 0.05 dollars, UMA is 0.46 dollars, and API3 is 0.37 dollars. Do the younger folks play fair, and do the older hands have tricks up their sleeves? The current oracle market is definitely worth watching. Which oracle projects are you interested in? Feel free to discuss it on Gate.