Decentralized prognosticators help connect off-chain external data and apis to the blockchain. In other words, a predictor provides a framework for an intelligent contract to access data that is uncertain or cannot be retrieved from the information on the chain. This information can be anything from price information to weather reports. In this way, the predictor acts as a bridge between the blockchain and the outside world.
Why do we need a prophecy machine
Smart contracts offer a new way to create new decentralized applications (DApps). However, smart contracts generally do not have access to real-world information, such as data on the web, or anything that needs to be accessed through an API.
This is a major barrier to the mass adoption of the entire DApp, as data is required for almost all technical aspects. For example, a decentralized exchange (DEX) cannot correctly calculate the amount of collateral needed for a leveraged exchange without access to the underlying asset price.
How does the prophecy machine work
The predictor acts as an intermediary between the dataset and the blockchain. The predictor queries external resources with the blockchain connected to it. The predictor then validates the required data through its internal security framework and relates it to the requesting blockchain client. This data is actually received by the blockchain as an external transaction, ensuring that all nodes connected to the chain share this information to verify the next transaction.
Problems with predictive machines
The decision of any intelligent contract execution depends to a large extent on the quality of the data provided by the predictor, which makes the security of the data source crucial to the security of the chain, which is also the main problem that the predictor has not been solved so far. However, using different types of blockchain prognosticators can significantly reduce this risk.
Prognosticators can be centralized or decentralized. The essential feature of the former type is to import data from a centralized repository, a typical example being to query live data from a web site running on an AWS server. This approach often negates the technical advantages of blockchain, since a single entity will control the data provided to smart contracts. However, in some use cases, especially around information from real-world data, the use of a centralized predictor is unavoidable.
Decentralized prognostics significantly reduce the risk, and instead of relying on a single entity to provide the data source, the smart contract queries multiple prognostics to ensure the validity and accuracy of the data. Each predictor operates autonomously in a decentralized network and collectively brings the off-chain data into the blockchain.
Type of prophecy machine
Broadly speaking, a prophecy machine is only as good as its sources. Thus, we can distinguish predictor types based on data source, information direction, and the level of trust it represents.
• Software prognosticators
• Hardware predictor
• Inbound predictor
• Outbound prognosticator
• Predictive machines specific to smart contracts
Software prognosticators process information from online resources such as databases and servers on the Internet. Because this information is instantly available online through the API, the software prophet can continuously request and feed data. Therefore, software prognosticators are the most common type of blockchain prognosticators.
Hardware prognosticators refer to devices such as electronic sensors, monitors and bar code scanners that convert real-world events from the Internet of Things (IoT) into data on the blockchain. For example, sensors can track the weather and transmit data to the blockchain.
Inbound seer & outbound seer
Inbound prognosticators enable intelligent contracts to receive data from the outside world. Instead, outbound prognosticators enable smart contracts to send data to the outside world. For example, a blockchain address can initiate an event in the outside world when it receives a certain number of tokens.
Predictive machines specific to intelligent contracts
Smart contract-specific prognosticators are customized to provide information to individual smart contracts. Although these prognosticators are expensive to maintain, they serve specific use cases, so they provide developers with a flexible environment in which they can customize prognosticators to meet certain requirements.
Predictor has become an important part of internal and external communication in open networks. Today, large networks of different predictive groups support the functions of many important cryptographic projects. Without the predictor, the DeFi project would have to rely on more than just the information available in its network, which would greatly limit its ability to operate in a multi-blockchain future, including cross-chain transactions.
For example, Injective relies on a group of decentralized prognosticators to provide the most accurate prices for the market. So we work with prophets like Band Protocol and Chainlink to provide reliable sources of facts. It's important to note that even in a decentralized environment, prognosticators are not infallible. Blockchain projects therefore have a responsibility to diversify the network of predictors they rely on to minimize the probability of error. That's one of the many reasons Why Ective works closely with multiple purveyors of prophecy.