Pawel Zaremba: The Oracle Directive - Connecting Worlds | ETHSofia

[Music] hi uh so I'm Pavo as you can see I'm a like by this wonderful design in this Millennium Falcon and like that I am a fan of Harry Potter but of course it's Star Trek but no one probably knows that anyway so uh I'm here to talk about oracles the Oracle directive uh as I call it today uh and the Oracle directive is mainly connecting different things connecting the blockchain with the rest of the world so what are oracles uh the main thing the oracles do is they turn gossip unreliable data like unverified information they turn it into fact fact is something that you can trust something that you know is true and something that uh can be used to to do other things and then of course you make it available on chain I mean you know you see what I did there you make it available on chain uh and um this is available to any smart contract uh that wants to use this data and uh I'm always emphasizing that is it is very important for uh the data to to reside on chain on the same chain that your protocol is actually so to summarize this part like Oracle is getting external data available to Smart contracts during transaction execution not before not after exactly in the in the time that you need it why are oracles uh this was drugs but never mind why areal like why do we need them so they are intrin to the Defi and like there is no defi without oracles because uh oracles are the only tool the only systems that can put the data uh on chain and everything that does that is actually an oracle but you could say that I am an oracle when I make a transaction and write a number or a sentence uh in a smart contract but they can a really reliable Oracle so how do we do oracles it seems simple Oracle systems seem simple they collect data uh because blockchains do not see anything besides uh besides themselves so they need something like oracles to collect data from The Real World or like from other chains or exchanges and like weather data if you need like I don't know if you need weather data on uh on chain because what are you going to do with it like I don't know but still they collect the data they sign it so they make it verifiable they make sure that like everyone else can check okay this is someone I trust they signed it and then they store the information on chain and uh first oracles were also very simple but like one actor is not enough if only I am running a node that creates Oracle node that creates the data on chain that's not reliable what we can do we can have multiple uh nodes multiple organizations multiple uh parties collect the same data and store it on chain and then we can choose or like calculate out of that the proper value so for example for prices what we do is we take uh prices for the same asset uh at the same point in time and we do a median out of that the median is very good because any outliers that we have in the set they do not affect the the end the final value because it's only a selection of the value in the middle that's why median is so powerful uh in contrast to average when you calculate an average every value uh come like adds its impact into the final value median is simple order everything uh ascending order for example and take the middle value and that's your median but this is right now on l1s and actually everywhere else this is expensive because uh the storing happened in in oracles version one the or the storing of data happened uh separately for everyone that means you have to have three or seven uh or how many uh how many you want transactions to put the data on chain and make create this final median so the next thing oracles did and we did in chronicle uh oracles created a a peer-to-peer Network when we created a peer-to-peer Network that uh collects data from different signers but you but as you can see uh the storing of the data happens only once because if the data is signed then no one can manipulate this like if they did we would know like everyone would know and it's public so we've got this data and we calculate the median uh offline we of chain and we create the transaction put it on chain and what the contract does only it just verifies if the value was uh like is a median because if you if you have all the values you again sort and select the middle value if the middle value is what what you want or when what was said that it is then it's fine if it's not then too bad it's not going to be published uh but of course with the gas also like going in price like right now it's like super super cheap but like there was times there were times that uh uh the gas cost like to 100 gay that that's unsustainable for anyone so we in chronicle we introduced uh a third type of oracles that where we use uh signature aggregation we use the schnore Snore scheme to do it so we managed to take all of the signatures because in version two uh you needed to verify every signature separately if for anyone who knows smart contact it's a easy recover like three times or 13 times or or something like that and here you can verify it uh like you don't have to provide all of the signatures with signature aggregation because all of the 13 signatures 13 that's the number we use because we want to be sure that it's actually accurate so 13 out of 25 is a good uh good multis because that's a multi and so we take those 13 signatures a lot of C data we compress that with schnor signature aggregation into one signature and then the smart contract like the transaction when when it's sent it has only one signature so it saves us a lot of gas that's for starters the next step for optimization that we did is that uh we create optimistic uh optimistic updates which means that we have uh we can optimize for compute Cycles so the optimistic update allows us to uh do less computation but we need to make sure we can verify the data if it's wrong for some reason so there's a uh challenge Bounty included in that system that you can uh ensure that the data was uh correct and afterwards you if you detect a b signature or or a bat update you can see you can take the the Bounty which is one ether on every oracles and this is like the uh explanation with images so we have data and we normally separ verify the every signature separately but this is very expensive and then we can aggregate the signature it is still expensive but it's not as expensive but it was before but here uh when we do an optimistic update one of the validators the data notes on the left so left uh so one of the validators says okay I see this complete signature I see those signatures for from 13 validators and I'm going to vouch I'm going to use my signature to say I see it it's okay and then uh it's super cheap uh for us to do do an update because the first step is to send it to the contract but it's not yet the proper price we have a challenge period of uh of a few minutes 20110 depends like on the system but we have a challenge period in which the value is not yet considered stored it's just pending and then in this time you can create your own bot or you can do it manually if you want you can see okay this signature here doesn't compute uh I see someone said it's okay so I can use this information because it's all public in the logs from ethereum you can use this information and uh challenge accept the challenge and uh what what happens is this data doesn't get propagated into the smart contract it gets uh reverted like it's not even going to get reverted to the previous price like there's nothing it's like the update never happened but at the same time we are Banning this uh actor that created this bad uh authentication uh like sign this bad B multi- signature transaction and what happens as well is you get some ether so that's how we protect the system and this is wonderful because with this we can scale the number of validators uh theoretically infinitely infinitely but the thing is that it is very important when you are using oracles it's very important that you know how many signatures for a multi you need you like the Oracle needs to have to do an update so there are some Oracle systems and Oracle providers that say okay four out of nine is fine but it's not and the the biggest problem is when you don't know who those four are because actually it could be one person uh so with on optimistic update you have we can scale the number of validators and only when there's a problem we can verify okay that verification is going to be expensive but still you get the Bounty so it's a win-win for everyone we protected the funds and you got the uh the Bounty for this challenge where are oracles so uh you can check out our dashboard at chronical lab.org dasboard or like go to our website uh Chronicle lab.org and you can see how many oracles we have there are there's a main net version and there's of course a test net version so you can have uh you can play with this and uh verify yourself to be able to do the updates and so so on and like join the system to to to read the oracles uh and what you need to remember is that your protocol like anything that you do if you issue loans or like do something else with the data your protocol is only as strong as your weakest link if something like if you have a super robust system but you use a bad Oracle then I'm sorry your funds will uh be stolen like recently there was an uh an incident with an oracle provider whose name I'm not going to say but you can Google it and like there's there was a bad price in the Oracle and the money went poof uh of course it's not really their problem because it's the data source that was responsible but still like they didn't have a system to verify if it's actually what it should should be so know your oracles or be uh another article on rect uh that's that's super important I wanted to talk about the properties of oracles that you need to look uh at when you are trying to choose uh Oracle provider or like build a system because when you build a system maybe sometimes it is okay for you to use uh one of two multi for your funds maybe that's fine because there's not much money in there and like you're fine with it but what's important it's not that it has to always be super super like complex and secure it needs to be adjusted to what you actually need so you need to take into account the risks that come with using any module Oracle is one of the modules in systems any module uh in in your protocol so for accuracy it is super important to look at an oracle provider and Oracles in general to see how many sources are there on this uh on the start like on the left side your left like what there was the data so you need to check how many independent sources were queried for this data how the data is modeled is it a median is it a median of medians of medians or is it just one source or is is it five and are they actually independent are they public or is it like some number uh like I don't know out of thin air and also you can check as I said with median You The One Source doesn't affect the out the outcome with average it does that's problem and how is the Integrity preserved so what's the signature scheme what's the signature type and what's the uh how many signatures do you have on the on the multis then consensus how is the truth determined so that means if we have have a peer-to-peer network of data providers for in an oracle system like how do we decide which value is correct that also touches on the median uh because like in our systems we have a median on the validator side and a median uh in the model itself so the data is a median of medians which is quite secure we never had a problem with that and we have been around for a like since uh 2017 because Chronicle was part of maker da you might know it as sky right now but Chronicle was part of maker da and we've secured with like this is the same team and the same software also of course developed to be better uh in time uh the same software that was protecting maker Dow and this is a super OG system that works until today avalability this is super important when you think that some Oracle providers have so-called pool oracles so they put the data somewhere in an API or on a different blockchain and then when you do a transaction you take this data from that source and use this data to update the Oracle and do the transaction but what happens when this Source gets lost and like it is because of that it's it's very important that uh the protocol that you are and the chain that you are on your protocol is is exactly on the same chain as the data so the Oracle is a smart contract on the same chain so if the blockchain is broken we have bigger problems everything goes to but assuming the blockchain works you are fine and you are safe so uh that's super important to look at like what's the data availability aspect of uh of the oracles and the cost in P pool oracles the problem is that the cost of update is not on the protocol side it's on the side of the users so it's actually a tax a bad word in crypto a tax on users uh so I like I personally do not recommend and uh pull oracles for systems that have users and a lot of users and a lot of detail users because uh like you're just taxing them you're just making the transactions more expensive for them uh and about the cost of course there's the aspect of scaling as I said we have oracles and then and the updates that allow us to have like 200 validators so it's like super robust value and have like super super low price for your protocol to to use this Oracle so this is like a no-brainer uh transparency yeah that's a big issue because in chronicle the Oracle provider the the data providers the validators as we call them they are reputable projects they stake their their reputation uh they stake their reputation to make the update uh to to to say that this data is correct if this data data wasn't correct for example let's say ether did something wrong and gave us a bad price then uh like their reputation is something that they value they value very much so that's super important and you need to look also at the data providers permissions who can change the parameters who can do the update that's also super important and whenever something bad happens or whenever you are planning for something bad to happen what you need to look at is how probable is this uh thing that can happen and what's big what is the impact how big is the impact uh because sometimes maybe you can like play and and and tweak the the risk parameters on your protocol uh According to some factors and all of that factors actually uh at the end uh contribute to how expensive your protocol is so the one thing that is also super important important and it's not found anywhere yet is an independent verification metrics and tooling as a public good why as a public good because it doesn't H like it cannot be compromised by someone paying okay you say our protocol is fine and uh and we're going to pay you money no that cannot happen so it needs to be public good it needs to be crowdsourced and it needs to be credibly independent I am not credibly independent because I work for chronicle but I really am passionate about that and I would support it with all my heart H and skill if someone started on let's say L2 L2 beat for oracus I hope you have heard of L2 beats it analyzes layer twos and it says that most of them are but well that's true uh and then if we had something for oracles that would be a game changer and it is really and it should be somewhat automated so you can just get the inputs do the calculation and the appli would show you or like the code would show you okay this is bad or this is good main thing I would like you to remember do not trust verify always verify When someone tells you oh we we are going to select a very good strategy for you yes show me the code like never trust and right now as you can see like you cannot even trust your browser but that we actually knew but uh you cannot trust your computer I think we also knew that you cannot trust AI I don't know how it's going to be because like it's not Skynet yet but who knows so yeah uh I am Pavo I work with Chronicle I'm also a co-founder of e woro and uh if you would like to know more go into our website find us on Twitter as well like the chronicle Labs uh @ Chronicle Labs is our Twitter handle and uh I do hope that I helped you understand the oracles a little more yeah and transmission [Music]