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Since the 2020 DeFi boom, the adoption rate of decentralized finance products and platforms has been increasing. According to DeFi Pulse data, the DeFi ecosystem has grown from a $1 billion market value in February 2020 to more than $92 billion in October 2021. The Blockchain and decentralized ledger technology have aided in streamlining processes by eliminating the need for third parties, resulting in a smoother and more transparent experience. In place of third parties and intermediaries, smart contracts, which are self-executing contracts stored on the blockchain and run when pre-determined conditions are met, are used. As a result, they contribute to transparency and risk reduction in the DeFi ecosystem.
Although Smart contracts have numerous applications, current market data is still required to determine the payment ratio to be received by each party. Smart contracts cannot access and handle updated information and actual data on their own. Oracles were created to address these issues; they are used to assist smart contracts in handling updated market information and verifying the validity of off-chain data. Oracles can gather various types of information; once the smart contract receives the input, it responds to it.
Regardless of how good Oracles are at gathering up-to-date information for smart contracts, they have a few flaws that detract from the overall experience. First, the use of Oracles in blockchain negates the decentralized network's "no third parties" and full decentralization attributes. Transactions on a decentralized network will no longer be "trustless," as a third party such as Oracle will wield significant power. Many decentralized projects have attempted to implement decentralized oracles, but they all fall short of achieving full decentralization and commercial viability.
QED, a decentralized Oracle protocol, takes a unique approach to address the flaws in Oracles and other decentralized Oracle protocols. DelphiOracle, the QED base software, is the most widely used Oracle on WAX-io, with 1400+ actions per hour. DelphiOracle has been in operation for nearly four years, and the software has witnessed the evolution of DeFi from its inception to the boom era. Every financial transaction on the QED protocol is done in a trustless and fully decentralized protocol. To achieve complete decentralization, QED issued QED tokens to oracles on its protocol. Oracles can use the tokens to run and own a portion of the platform. The QED token system has aided in creating accountability and removing the risk of collusion from the ecosystem. The Oracles on the platform can only determine the fee required to carry out the contract and cannot make other arrangements.
On September 21, 2021, Pyth Network, a Solana-based Oracle protocol, experienced a glitch that caused Network to record the price of Bitcoin as $5,402, despite the fact that the actual price was nowhere near that. It was approximately 90% off from the actual price. According to the network, the problem was caused by a decimal error in two of its data supply systems. This issue resulted in mass liquidations on DeFi exchanges such as MangoMarkets, with users unable to recover their funds.
The response to the glitch is just one of several flaws in today's Decentralized Oracles. The QED Oracle Protocol appears to be the solution to these issues. For example, if this flaw had occurred on the QED Oracle Protocol, a claim would have been filed, and resolution oracles would have determined that the price input was incorrect. The QED solution would have then allowed the affected investors to receive collateral bonds.
The QED protocol is a decentralized Oracle aggregator and protocol that connects the technological and commercial aspects of DeFi. The QED team intends to integrate with both permissionless and public blockchain to capitalize on its innovative economic model. The UX network, a fast and highly scalable network, is where smart contracts are executed based on the QED protocol. So, with UX Network, QED can scale and integrate with various DeFi projects. QED's unique approach to innovating the decentralized Oracle sector has positioned it as the ideal solution to the sector's flaws.
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