The Great Oracle Comparison
Oracles have come a long way since 2017, when Chainlink and Zap Protocol were the first who announced to have started development of decentralized oracle networks. Today, there are multiple oracle networks live on mainnet, and developers have freedom of choice which solution to implement. With the crypto community finally waking up to their importance, we felt it was time to provide a brief overview.
We will focus on the oracle platforms with a native token, and list them according to the size of their respective market capitalizations.
Note: Chainlink and Band Protocol appear to falsely claim to be the first decentralized oracle network and community-curated oracle network. Zap Protocol preceded both.
Chainlink is the first oracle network to break through the mainstream media barrier, through striking collaborations with, for example, SWIFT and Google. It is safe to say Chainlink is currently the ‘industry standard’ solution.
Chainlinks’ model works by having multiple nodes relay multiple datafeeds. Staking and reputation features have yet to be implemented. Anyone is able to join or integrate Chainlink through freely available documentation, and operate it through a local graphical interface. However, feeds.chain.link lists “sponsored” nodes exclusively.
Chainlink and parent company SmartContract emphasize corporates to partner with them and sell their data, integrate or join.
3rd Party service providers, like LinkPool and HoneyComb, also list non-sponsored nodes, and offer services such as integration, node certification and marketplaces.
- Marketcap: $1,300,000,000
- Rank: 15
2) Band Protocol
Band Protocol is a community-curated oracle network that employs bonding curves users can bond value to. This functions as a: 1) Reputation system, 2) Data curation system, 3) Incentivization system, and 4) Stream of revenue for stakers, who collect part of the providers’ fees.
Band Protocol chooses who gets to provide data for a specific dataset, as the protocol picks the providers with the highest amount staked to them. Anyone is able to join or integrate Band Protocol through available open-source documentation.
- Marketcap: $5,700,000
- Rank: 456
Tellor is dubbed the ‘Proof-of-Work Oracle for DeFi’. It leverages a mining mechanism similar to Bitcoin, except to have miners compete to deliver data and reward them with minted tokens.
For the foreseeable future, Tellor aims to target the ‘DeFi’ market exclusively and so offers specific price feeds only. Miners are required to stake a minimum value to be eligible to provide data, which also serves as penalty system through seizing the stake in case of corrupting data. Accordingly, a dispute process is implemented where users have up to a week to vote for the outcome they deem correct in case of conflicting data.
Anyone is able to join or integrate Tellor through freely available open-source documentation, except funds are to be acquired through the Tellor team.
- Marketcap: $5,100,000
- Rank: 483
4) Zap Protocol
Zap Protocol started life as the first decentralized oracle platform. Like Band Protocol, it leverages bonding curves, a term coined by the Zap team, to facilitate a community-powered reputation, curation, speculation and incentivization system. It also integrates programmable smart contract business logic.
Additionally, Zap Protocol has ERC20 token issuance capabilities, similar to Ethereum. Albeit with the added benefit of inherent liquidity, also called ‘tokens 2.0’ or ‘smart tokens’. Zap Protocol is the native DEX for these smart tokens. The protocol is dubbed a ‘Bonding Curve Curation Market’ for its multiple integrated functionalities allowing for several types of community-curated markets and services.
Anyone is free to join or integrate Zap Protocol through freely available open-source documentation and a graphical interface at zap.org. There are no requirements to participate and there are no mechanisms in place that enforce trusting any stakeholders or other 3rd parties.
- Marketcap: $1,300,000
- Ranking: 842
We are in the early innings of decentralized oracles powering blockchain applications, with each experimental model carrying its own strengths and weaknesses. It seems likely there won’t be one oracle to ‘rule them all’, and upcoming projects such as Band Protocol, Tellor and Zap Protocol will capture a share of the oracle market as well.
We intend to be provably factual. Concrecte feedback is welcomed.
- Special thanks to the Chainlink community for providing extensive feedback!