Interview with Abdul Osman, CEO & Founder of Goracle

Oracles act as the bridge between blockchain technology and the outside world, enabling smart contracts to interact with data from external systems. Aditya Das interviewed Abdul Osman to talk about the role of blockchain oracles in the world of decentralized finance, the challenges faced by oracles, the evolution of their role within the blockchain ecosystem, and how Goracle is innovating within this space.

The timing of the interview coincides with the upcoming launch of the GORA token via Initial DeFi Offering (IDO). More info on how to participate in the IDO can be found here.

Aditya Das: How do you see the role of blockchain oracles evolving in the future, particularly in terms of improving the security and reliability of the data they provide?

Abdul Osman: Currently, there is a lack of trustless, economically secure oracles that do more than provide spot crypto prices. This has led to an environment where projects are building their own oracles, and most projects that need an oracle cannot claim to be fully trustless or decentralized. This also is developmentally expensive, for projects to continually build the same piece of software, thousands of times.

With greater scrutiny on projects’ decentralization status, whether through government regulation, or smart contract audits, demand for true decentralization and/or trustlessness is growing. Furthermore, we are starting to see more modular infrastructure from external projects being incorporated into apps — this includes features like decentralized identity or off-chain storage being integrated into apps.

As such, oracles that can provide rich data are going to be more in demand, and are going to be expected to integrate seamlessly into a project’s architecture. They will likely be similar to Web 2 “Packages” or “APIs” in terms of ease of integration. Once that status is reached, it could fuel growth in the innovation of apps being built.

Aditya Das: What are some of the biggest challenges that blockchain oracles face today, and how can they be overcome?

Abdul Osman: One of the key things one might notice when researching oracles is that they are all designed differently. Some use permissions to control the participants, while others use penalties and insurance to prevent maliciousness. Truly decentralized oracles should ultimately be as permissionless as the blockchain, with the same level of security as the blockchain. Achieving that balance of decentralization and security has been a challenge for many oracle providers.

This challenge can be overcome by using similar consensus methods as blockchains. Most blockchains currently depend on proof of stake concepts, which are tried and true. Oracles can and should match that.

The second biggest challenge is the fact that Oracles are essentially protocols, and do not actually have access to any data. Data is generally expensive, and high-quality data providers are even more so. Oracles typically require the protocol participants (i.e. node operators) to obtain the data, essentially forcing the role of data provider on node operators; and these are two very different roles.

This leads to situations where node operators opt to get cheap or free data, leading to suboptimal data, or data providers are shut out or disincentivized – leading to low participation. This eventually leads to a very limited data market, leading to limited use cases being realized. This can be overcome by separating the roles and expecting node operators to focus on reaching a consensus, while consumers have the choice regarding the data providers they want to get data from.

In recent articles, Brave New Coin has dived into Oracle exploits and the Mango Markets failure. Mango Markets, a Solana-based derivatives market, was exploited by an attacker who was able to manipulate a price feed that was used by an oracle to report a futures contract price. The spot markets were illiquid enough for the attacker to manipulate without much starting capital. Perhaps this situation could be avoided if consumers picked their oracles and node operators with a focus on securing the oracle network.

Aditya Das: In terms of the Oracle economy, how does the staking and reward system maintain a balance between incentivizing participation and ensuring the network’s security? How does Goracle approach this challenge?

Abdul Osman: Incentive design is notoriously difficult, especially in an environment where there is much to gain from a successful attack. One idea is that the incentives should outweigh the gains from any attack. Or, the punishment from a successful or attempted attack should also outweigh the possible gains from an attack. However, no Oracle protocol can reward as much as it secures – and even if it did, the incentive to attack is still there. Slashing doesn’t guarantee security, only punishment – and web3 attackers are generally too sophisticated to take actions that lead to punishment anyways. Dispute resolution mechanisms lead to environments where the data needs a certain amount of time to pass, at which point the data may be stale.

As such, Goracle solves this balance by a) making the participation of node runners a trivial task. By abstracting away all the complexity, users can simply download and run a file, and stake via a web interface, and non-technical users can generally become a node runner in under 20 minutes (technical users can do it in 5 minutes). This makes it so that incentives, tokens rewarded from a pool of fees and treasure, makes running nodes profitable for node runners that join up to a certain point in return for the amount of work that needs to be done. Large scale, institutional validators also participate and are able to simply take commissions from users who do not want to run nodes, but still want to stake their tokens for the security of the system.

In terms of how this makes the system secure, it incentivizes large numbers of non-related participants to secure the network, making an attack on the network requiring 66% or more of the circulating supply of tokens, which would be prohibitively expensive. The Goracle economic doc goes into more detail about how Goracle approaches this challenge: https://docs.goracle.io/goracle-docs/v/economic-design/market-design/safety-and-ease-of-use/system-safety-and-security

Finally, the last way Goracle aims to get high-quality data on-chain is by clarifying and separating the roles of data providers, and node operators. Node operators simply run a black box, they should have no idea what’s passing through. Data providers, on the other hand, should be the ones to maximize the value they provide, by being able to charge customers directly. Thus, by incentivizing higher-quality data providers, a data marketplace can be created giving customers more options when it comes to data, leading to more interesting use cases being built.

Adita Das: How do different oracle networks compete and differentiate themselves from one another? What are Goracle’s unique features?

Abdul Osman: The competition in the oracle sector is not very intense at the moment. While Chainlink may hold the largest market share, if we take into account how many projects are building their own, centralized data oracles, it becomes clear that the Oracle sector lacks innovation to keep up with the innovation of other sectors.

In a sense, oracles have their own trilemma to solve: speed, security, and decentralization. And it must solve that trilemma while taking into account the different motivations of node operations, customers, and data providers. The key properties where Oracles differentiate themselves from others include:

• Speed
• Finality
• Accuracy
• Reliability

Goracle’s consensus mechanisms, where nodes are randomly selected for each block to fetch data, is forked from Algorand’s consensus mechanism, designed by Turing award winner Silvio Micali, whose research over the past four decades is the foundation of many blockchain cryptographic primitives today. Furthermore, Goracle aims to create a Data Marketplace, where web2 data providers can plug in with minimal effort, and immediately increase the value of the network by allowing interesting and exciting use cases to be built.

Chain Link currently has a market cap of US$3.3 billion. The next largest oracle has a much smaller market cap of around ~US$55 million, this is just ~1.5% of the total market cap of Chain Link. The blockchain oracle sector does appear primed for alternative infrastructure and new disruption.

Adita Das: How can Oracle vulnerabilities, such as the ones that led to the Mango Markets and BonqDAO attacks, be mitigated or prevented?

Abdul Osman: Oracles need to be able to give much richer data than just the spot price. Furthermore, data needs to be final once written to the chain. Many large projects, such as Liquity, rely on spot prices for lending, but the problem there is that sometimes pricing does not take into account volume or sudden changes in volume. This is why many protocols can only lend or collateralize currencies like ETH because it’s safe to assume these are stable volumes. Mango Markets’ vulnerability was technically not considered a hack: "Neither Oracle providers have any fault here. The Oracle price reporting worked as it should have," the company says. The trader inflated the price of a token simply by increasing the volume of a relatively obscure token to abnormal levels.

The BonqDAO failure highlights the issue with prices not being final, as well as node operators choosing where they get the price from. Having to wait for data to become final could result in that data becoming stale, reducing the scope of the type of applications that can be built. By mandating the data sources node operators must use, multiple, independent operators can cross-check the values are correct, therefore allowing the data to be final. Of course, the data provider may be the one to submit malicious data, which is why multiple, high-quality sources must be mandated. Another way would be to use multiple oracles.

Aditya Das: How else can blockchain oracles play a role in facilitating the adoption of decentralized applications and smart contracts by more mainstream institutions and users?

Abdul Osman: Oracles should, as much as possible, mimic standard web2 methods for obtaining data, namely API or REST. Oracles are also in a unique position to enhance blockchain functionality by providing services such as storage, or computation. Web2 standards, increased functionality, as well as layer 2 services (e.g. storage, computation) can allow developers to begin porting web2 applications to the decentralized world.

Aditya Das: Are there any potential real-world use cases for blockchain oracles that haven’t been fully explored or utilized yet?

Abdul Osman: Specifically within DeFi, one area to truly expand is providing uncollateralized loans. While these are higher risks, the risk can be reduced through zero-knowledge proof-based history of an individuals’ borrowing history, such as decentralized (or even centralized ) credit scores.

With more and more complex data being placed on-chain, such as equities, there should be an increase in complex decentralized financial products available. DeFi, although it has grown, still dwarfs traditional use cases.

Outside of DeFi, supply chain management, and insurance and claims are other areas that could be explored. For example, verifiable data about the movement of goods, and inventory levels could allow lending against goods. Temperature and humidity conditions could help verify their quality or help settle insurance claims faster. Real-time data about events such as accidents, weather conditions, or flight delays to trigger automatic claims processing and payments.

Beyond price reporting, the usage of oracles is limited. There are, however, some other unique use cases for oracles in the wild. Ethersic for example, offers decentralized insurance products for crop insurance and flight delays. It uses oracles to capture weather data and flight information. Oracles are also used in the Non-Fungible Token Space to create robust verifiable randomness functions (VRFs). Aavegotchi uses VRFs to create randomness when assigning attributes to NFTs. It uses an VRF powered by oracle so that it may have “access to a tamper-proof and auditable source of randomness.” Axie Infinity, Polychain Monsters and Pancakeswap also use this type of oracle to ensure randomness during NFT minting.

Another emerging application of oracles is cross chain communication. Oracles can create a secure way for blockchains to be interoperable, raw data can be reported without the need for full integration between chains. This opens a new world of possibilities for Web3 powered DeFi including cross chain loan collateralization and yield farming. Following an initial launch on the Algorand blockchain, Goracle will launch its solution for the Cosmos ecosystem followed by a version that will be available for Ethereum Virtual Machine (EVM)-compatible blockchains.

In conclusion, the potential of blockchain oracles like Goracle is vast and likely untapped. As we delve deeper into the decentralized economy, the need for accurate, secure, and efficient oracle solutions will only continue to grow.

It is not simple, as Goracle CEO Abdul Osman explains, to launch robust community driven oracle infrastructure. Maintaining network security to ensure the accuracy and reliability of the data they provide, is no easy task. Osman says that Oracle networks require consensus models as complex as the ones deployed by blockchains.
Goracle’s innovative approach to these challenges, particularly its separation of the roles of data providers and node operators, as well as its ease of use for participants, is a new paradigm for the blockchain oracle space.

As oracle networks evolve and become more integrated and user-friendly, we can expect to see an expansion in the complexity and diversity of decentralized applications and smart contracts. The future of blockchain oracles is undoubtedly an exciting space to watch.

Goracle is backed by notable industry players including Cointelegraph, the Algorand Foundation and Borderless Capital. The project, in preparation for a token and mainnet launch, has been successfully running an incentivized testnet. Abdul has also recently conducted an AMA with the TokenDAO community and Crypto miners. Following an initial mainnet launch on the Algorand blockchain, Goracle will then release for the Cosmos IBC and Ethereum Virtual Machine (EVM)-compatible chains.