[Myung Jung-sun's Analysis] How Oracle is Revolutionizing Blockchain from Insurance to Stocks

# The Quiet Revolution: Oracle Technology at the Core of Blockchain Expansion BlackRock, the eponymous giant of asset management globally, took a groundbreaking leap in 2023 by launching the “BUIDL” project, which introduced U.S. Treasury bonds onto blockchain technology. This pioneering initiative signifies a transformative phase in the tokenization of traditional assets, heralded by investors as the dawn of a new era. However, this monumental shift is underpinned by an essential yet often unnoticed technology: oracles. ## What Are Oracles? Oracles serve as the crucial bridge connecting blockchain with the external world. Acting as "data conduits" or "information gateways," they allow smart contracts to interact with real-world data. For instance, executing an insurance contract that compensates in case of rain requires access to weather data. Oracles fetch this data—perhaps from meteorological agencies—and relay it to the blockchain. Beyond just weather, oracles can synchronize a wide variety of information, ranging from exchange rates and stock prices to sensor data and clinical trial results, enabling smart contracts to respond accurately to real-world events. ## Oracles in DeFi: Powering Decentralized Lending A prime application of oracle technology is found in decentralized finance (DeFi) lending. On platforms like Aave and Compound, users can deposit cryptocurrencies such as Ethereum (ETH) as collateral to borrow stablecoins. The real-time value of this collateral hinges on data provided by oracles. Take Chainlink as an example. Its nodes aggregate Ethereum prices from multiple sources, such as CoinMarketCap and CoinGecko, then verify and average them. If the data reveals “Ethereum has dropped below $1,700,” the smart contract promptly initiates a liquidation process. Thus, the integrity and accuracy of oracle-delivered data are vital to DeFi’s efficiency. ## Vulnerabilities: Risks of Manipulating External Data While oracles are integral in bridging blockchain with reality, they also present significant vulnerabilities due to their reliance on external data, which is susceptible to manipulation. A notable incident unfolded in 2022 with Mango Markets, where manipulated oracle pricing enabled exploitation. Attackers artificially inflated the MNGO token price by 30 times, using the overvalued asset as collateral to siphon off hundreds of millions of dollars from the protocol. This incident underscored a crucial truth: the efficacy of smart contracts is only as dependable as the data oracles provide. ## Evolving Oracle Security: Multi-Sourcing and Decentralization Acknowledging these risks, major DeFi platforms like Aave and Compound have shifted from relying on single data sources or centralized exchanges for price information. They now employ multi-source architectures, aggregating and cross-verifying data from numerous independent providers, thus enhancing reliability. Security measures like Byzantine fault-tolerant consensus algorithms, encrypted data transmission protocols, and multi-node operations further strengthen oracle systems’ robustness. Chainlink epitomizes this advanced structure by running a decentralized network where data accuracy is ensured through mutual verification rather than centralization. ## Oracles Enter a “Second Renaissance” Amid RWA Boom Oracles are transforming from simple data relays to “reality reflection systems.” The rising trend of real-world asset (RWA) tokenization, spanning real estate, government bonds, and artworks, necessitates increasingly complex data inputs like asset location, ownership, condition, yield, and legal status. McKinsey predicts the RWA tokenization market could expand to $2 trillion by 2030, with optimistic projections going up to $4 trillion. This trend is driving a heightened demand for advanced oracles capable of managing multifaceted datasets. ## The Oracle Market Landscape: Chainlink Leads the Pack The oracle market has evolved into a competitive space dominated by three players: Chainlink leads as the market titan, while Pyth Network and RedStone emerge as specialized challengers. ### Chainlink: The Unchallenged Ecosystem Leader Chainlink, launched in 2017, stands as the gold standard in oracles. As of March 2025, it secured approximately $31 billion in total value secured (TVS), representing 53.3% of the global oracle market. By market capitalization, Chainlink’s token accounts for an overwhelming 76.9% of the sector. Initially focused on decentralized price feeds for DeFi, Chainlink has significantly broadened its offerings into domains like smart contract automation, random number generation (VRF), cross-chain data transmission (CCIP), and secure data privacy protocols. Collaborations with banking giants like SWIFT and UBS further showcase its role in seamlessly integrating real-world assets (RWA) into traditional finance. ### Pyth Network: Specializing in Ultra-Low Latency Pyth Network has distinguished itself as a Solana-based oracle specializing in ultra-low latency and high-frequency data transmission. With millisecond-level response times and direct data feeds from institutions like Wintermute and Flowdesk, Pyth excels in high-speed trading environments. Operating across 65 public chains, its 2024-launched Express Relay function transforms Maximum Extractable Value (MEV) into protocol revenue, securing its position in fast-paced markets. ### RedStone: Dual Push-Pull Capabilities and AI Ambitions RedStone, a rapidly growing entrant in the oracle space, integrates with over 70 public chains and supports both push and pull data models—the sole provider to do so. The push model ensures real-time responsiveness, while the pull model offers gas-efficient, request-based data retrieval. RedStone’s AI ambitions are embodied in its CLARA framework, designed for blockchain-based data exchanges between AI agents. It has also gained prominence in RWA tokenization by delivering real-time Eurozone government bond ETF data. ## Multidimensional Datasets Propel Oracle Specialization The oracle sector is progressing into a second act, moving from single-purpose price feeds to multi-dimensional, industry-specific data solutions. Modern projects require inputs ranging from IoT sensor data and AI output values to clinical research and weather forecasting. For example, IoT-based oracles like Echolink have connected over 8 million device data points to the Solana blockchain using a Proof-of-Device-Work protocol. Similarly, AI-dedicated oracles like Bittensor enhance model selection through competitive algorithms, recording results on-chain, while bio-data oracles assist in determining molecular asset values for pharmaceutical developments. ## The Era of Multi-Infrastructure Integration Oracles are no longer mere price relayers; they have evolved into versatile infrastructures linking tailored datasets to the blockchain ecosystem. In this age of “2 to N” ecosystem expansion, oracles have become gateways to blockchain's broader industry adoption, establishing themselves as indispensable elements in future technological infrastructure.