Oracles are essential within the blockchain ecosystem because they expand the range in which smart contracts can perform. Without blockchain Oracles, smart contracts would have extremely restricted applications as they would not have access to information from outside their networks. Horizon Protocol, therefore, functions within a blockchain Oracle framework as well. How does Oracle’s functionality work with the Horizon Protocol ecosystem? Let us find out.
Why Do We Need Oracles?
Oracles provide external information to smart contracts that function on blockchain technology. Since smart contracts and blockchains are sealed systems (with stringent processes for uniting external information sources), Oracles offer a method of safely implementing off-chain information to a blockchain network’s on-chain ecosystem. Therefore, they are a connection between the external world and the realm of blockchain.
Horizon Protocol is benefitting from Chainlink Protocol which is among the many Oracles. Chainlink is a decentralized Oracle network that offers real-world information to smart contracts on the blockchain. Smart contracts are agreements on the blockchain that are specified in code. When there are some conditions, they examine data and automatically perform. LINK tokens are the digital asset token employed to render payment for services on this network.
Chainlink is a decentralized ecosystem of nodes that offer information and data to on-chain smart contracts from off-chain sources through Oracles. This process, in hand with additional protected hardware, reduces the dependency issues if utilizing a single centralized authority.
(Source: Chainlink price feeds)
Band Protocol is another mainstream Oracle that Horizon Protocol is using for its platform. In a world where information is valuable, blockchain Oracles such as Band play a critical role by offering verifiable information to smart contracts and decentralized apps.
Band Protocol is a decentralized Oracle that collects real-world information and transmits it to smart contracts on blockchains such as Ethereum and Cosmos. Decentralized finance applications require dependable price feeds.
Other decentralized applications (dApps) and smart contracts need a range of real-world information inputs, varying from present happenings, weather to sports and even random numbers. Band Protocol presents one method to take that outside data securely and safely to the on-chain ecosystem.
(Source: Band Protocol price feeds)
Horizon Protocol receives data from established Oracles such as Chainlink Protocol and Band Protocol as well as proprietary information from Phoenix Oracle. These include other assets such as non-US market indices, stocks, and illiquid or alternative assets like artwork, real estate (REITs), and NFTs.
Phoenix Oracle will become an increasingly significant functional part of Horizon Protocol where the inclusion of node operators will contribute significant value. Oracles are required for a range of organization applications that need off-chain real-time data feeds along with Horizon Protocol itself.
Since Horizon Protocol is a DeFi platform that expedites the on-chain exchanging of synthetic assets that reflect the real economy, it becomes vital to have solid price feeds from Oracles backing them up. The different Oracle providers Horizon Protocol use enforces the security and safety of the price feeds. The variety of Oracles also represent the range of synthetic assets that Horizon Protocol gives users. You can learn more about Horizon Protocol on Twitter and Telegram here.