Oracles provide a way for the decentralized Web 3.0 ecosystem to access existing data sources, legacy systems, and advanced computations. Decentralized oracle networks (DONs) enable the creation of hybrid smart contracts, where on-chain code and off-chain infrastructure are combined to support advanced decentralized applications (dApps) that react to real-world events and interoperate with traditional systems.

Blockchain Oracle Use Cases

Smart contract developers use oracles to build more advanced decentralized applications across a wider range of blockchain use cases. While there are a potentially infinite number of possibilities, below are the use cases with the most current adoption.

Decentralized Finance (DeFi)

A large portion of the decentralized finance (DeFi) ecosystem requires oracles to access financial data about assets and markets. For example, decentralized money markets use price oracles to determine users’ borrowing capacity and check if users’ positions are undercollateralized and subject to liquidation. Similarly, synthetic asset platforms use price oracles to peg the value of tokens to real-world assets and automated market makers (AMMs) use price oracles to help concentrate liquidity at the current market price to improve capital efficiency.

Dynamic NFTs and Gaming

Oracles enable non-financial use cases for smart contracts too such as dynamic NFTs—Non-Fungible Tokens that can change in appearance, value, or distribution based on external events like the time of day or the weather. Additionally, compute oracles are used to generate verifiable randomness that projects then use to assign randomized traits to NFTs or to select random lucky winners in high-demand NFT drops. On-chain gaming applications also use verifiable randomness to create more engaging and unpredictable gameplay experiences like the appearance of random loot boxes or randomized matchmaking during a tournament.

Insurance

Insurance smart contracts use input oracles to verify the occurrence of insurable events during claims processing, opening up access to physical sensors, web APIs, satellite imagery, and legal data. Output oracles can also provide insurance smart contracts with a way to make payouts on claims using other blockchains or traditional payment networks.

Enterprise

Cross-chain oracles offer enterprises a secure blockchain middleware that allows them to connect their backend systems to any blockchain network. In doing so, enterprise systems can read/write to any blockchain and perform complex logic on how to deploy assets and data across chains and with counterparties using the same oracle network. The result is institutions being able to quickly join blockchains in high demand by their counterparties and swiftly create support for smart contract services wanted by their users without having to spend time and development resources integrating with each individual blockchain.

Sustainability

Hybrid smart contracts are advancing environmental sustainability by creating better incentives to partake in green practices through advanced verification techniques around the true impact of green initiatives. Oracles are a critical tool to supplying smart contracts with environmental data from sensor readings, satellite imagery, and advanced ML computation, which then allow smart contracts to dispense rewards to people practicing reforestation or engaging in conscious consumption. Oracles are also supporting many new forms of carbon credits to offset the impacts of climate change.

What are the competitor of Chainlink ?

BRY (Berry Data)

Berry Data is a transparent community-verified price oracle on BSC(Binance Smart Chain). Berry Data provides a trustless and decentralized alternative for off-chain data. Also, it provides the infrastructure for decentralized applications to query off-chain data by properly incentivizing miners to provide data.

Berry Data is an oracle system that parties can request the value of an off-chain data point and miners compete to add this value to an on-chain data-bank, accessible by all DApps on Binance Smart Chain. The inputs to this data-bank are secured by a staked miners network. Berry Data utilizes crypto-economic incentive mechanisms, rewarding honest data submissions by miners and punishing bad actors, through the issuance of Berry Data’s governance token, BRY, and a dispute mechanism.

Berry Data's ecosystem has four key components:

BAND Protocol

Band Protocol is a decentralized data oracle that aggregates real-world data and sends it to smart contracts on blockchains like Cosmos and Ethereum. Decentralized Finance (DeFi) applications need reliable price feeds, and other smart contracts and decentralized applications (dApps) require a variety of real-world data inputs ranging from current events and sports, to weather, or even random numbers. The Band Protocol represents one way to bring that external data safely and securely to the on-chain environment.

Band Protocol System Overview

When using Band Protocol, the process of verifying data via consensus is undertaken by network participants who own BAND tokens. BAND is Band Protocol’s native token, and is used as collateral by nodes that verify the real-world data that is sent to various blockchains. Nodes fall into two categories: validators and delegators. This two-node structure is common among Cosmos-based Delegated Proof-of-Stake (DPoS) blockchains.

Validators propose new blocks and participate in Band Protocol’s DPoS consensus protocol by voting on the authenticity of data. BandChain validators function the same way as validators on other blockchains built using the Cosmos SDK. Their uniqueness, however, lies in their native ability to execute requests to retrieve external data. For doing so, validators earn a fee. When a smart contract requests data through the Band Protocol oracle system, randomly chosen validators will attempt to retrieve the information requested and then submit the data in a report to the BandChain.

Validators’ individual reports are then aggregated into a unified final result. That result is permanently stored on Band Protocol, becomes available for the requesting smart contract, and is ready to be sent to other blockchains.