Smart contracts, especially for DeFi, are becoming a data-intensive industry. Oracle services are helping to bridge the gap.
Decentralized oracle service Umbrella Network officially launched on Ethereum on Friday, setting the stage for cross-chain transactions between the dominant smart contract platform and Binance Smart Chain, or BSC.
The cross-chain bridge connecting Ethereum and BSC was developed in-house at Umbrella Network, underscoring the need to transfer tokens and other crypto assets between the two networks. The cross-chain bridge also enables users to stake and farm crypto tokens on either blockchain. Umbrella said it’s planning future cross-chain integration with Polygon, Solana, Cardano and Avalanche, though no timetable was given.
Although the blockchain industry has given birth to several oracle services, Umbrella claims that its protocol provides quick and affordable price feeds when compared with the leading competitors. Initially, the protocol will have over 1,200 data pairs on Ethereum, allowing users to integrate data from spot cryptocurrency, crypto derivatives and traditional financial markets.
Oracles are considered to be an essential component of smart contracts because they provide reliable data feeds from external sources, thereby broadening the scope of their operations. The need for reliable data feeds appears to be growing as smart contract technology becomes more mainstream. Case in point: Brazil’s main stock exchange is exploring ways to provide data inputs for the country’s central bank digital currency project.
Protocols tied to decentralized finance, or DeFi, have been keen to integrate data oracles. Chainlink, the dominant oracle provider, has carved out a strong presence in this niche, especially since its successful deployment on Ethereum layer-two scaling solution Arbitrum in August.