Decentralized finance (DeFi) is reshaping the way we manage money, allowing individuals to truly take control of their financial lives. In this process of change, blockchain oracles, as important infrastructure, have become a bridge connecting the blockchain with the outside world. Pyth Network, as the world's largest first-hand oracle network, is a leader in this field.
Pyth Network’s mission and vision
Pyth Network has been working since April 2021 to provide Web3 developers with real-time data on global financial markets. The network aggregates information from more than 90 primary data providers, including the world's top exchanges and market makers. Pyth provides real-time price feed data for cryptocurrencies, stocks, foreign exchange pairs, ETFs and commodities to smart contract developers on more than 40 blockchains, assisting developers in building more accurate DeFi services.
As the blockchain industry moves toward a high-throughput DeFi future, the need for low-latency, high-frequency on-chain data is growing rapidly. The Pyth Network has played an integral role in enabling this transformation.
Why do we need new oracles?
Before the founding of Pyth Network, there were no price oracles on the blockchain for ultra-low latency, institutional-quality market data. This gap is mainly reflected in the following three aspects:
Speed: For many on-chain financial applications, the speed of oracle updates is crucial. If price updates on the blockchain are slower than in the real world, the accuracy of DeFi services will be severely affected and may even be subject to malicious attacks. Previous price oracles were updated every 10-60 minutes, which was obviously unable to meet the needs of high-frequency trading and instant decision-making.
Asset coverage and availability
Developers often face the dilemma of not being able to obtain the required price feed data. The data coverage of traditional oracles on different blockchains varies greatly, resulting in developers being unable to provide users with the financial services they need. This unbalanced allocation of resources directly affects the achievement of the goals of the agreement.
Data sources and data quality: Many traditional oracles rely on aggregated, third-party data sources, resulting in data ambiguity and unreliability. If the source of the data is unknown, developers and users will not be able to trust the quality of these price data, which will affect the security of smart contracts.
How Python Network works
Limitations of the traditional data transmission model: The design of traditional oracles is often based on a wrong premise: all financial information can be obtained for free in the Web2 world. Based on this assumption, the oracle provider only needs to incentivize network participants to obtain the data and transfer it to the chain. However, this model does not hold true in the world of financial data.
Taking financial exchanges as an example, in 2022, traditional exchanges made $6.6 billion in data fees alone. Annual subscriptions to professional data terminals can cost tens of thousands of dollars, and even some cryptocurrency exchanges have begun charging for market data. The financial data industry is like a walled garden, inaccessible to ordinary developers.
Python's innovative data transfer model
Pyth Network has established a new data transmission model based on the premise that "financial data is valuable". Rather than just providing a rough approximation of the data, the protocol directly supports and incentivizes the original owners of financial data to contribute it to the blockchain. Pyth material sources are "first-hand", provided directly by the creators of the material.
You can think of Pyth Network as a decentralized market data trading market. The creators of data are suppliers, and the applications that use these data are consumers. Just like Airbnb brought more vacation rentals to the tourism industry, the Pyth Network unlocks more high-quality data resources by incentivizing data owners to contribute.
The future of Python Network
As the DeFi ecosystem continues to grow, Pyth Network will continue to expand its data coverage and quality. By cooperating with more financial institutions and data providers, Pyth aims to provide developers with more comprehensive and accurate market data support.
In the future, Pyth Network will not only continue to improve the speed and quality of data transmission, but will also promote the further popularization of decentralized finance. As on-chain financial services continue to innovate, Pyth Network will become an important force driving this change.
Conclusion
The emergence of Pyth Network has injected new vitality into the development of DeFi. By solving the limitations of traditional oracles, Pyth not only improves the speed and quality of financial data acquisition, but also provides developers with more room for innovation. As blockchain technology continues to evolve, Pyth Network will play a more important role in the future financial ecosystem and bring better financial services to global users.