What is an Oracle in Blockchain?
According to coin trackers, there are over 9,850 cryptocurrency projects.
Most of them are launched from other blockchains like Ethereum, Binance Smart Chain (BSC), Waves, and more.
Only a few operate from their mainnets. By this, I mean, few projects have their blockchains. Some of them include, Chainlink, Maker, Uniswap, PancakeSwap, and others.
Here's an example. Bitcoin is a blockchain on its own, so is Ethereum, Cardano, Litecoin, Bitcoin Cash, Monero, and more.
The problem arises, especially for smart contracting platforms, when smart contracts want to fetch external data beyond those available in their primary chain. Take, for example, Uniswap smart contracts trying to extract pric feeds of EURUSD which aren't accessible on-chain.
To solve this problem, developers create Oracles—which are third-party providers—acting as a middleware.
A fancy name for a "bridge."
These bridges, essentially, link external, third-party, tamper-proof data and submit them to a blockchain from there where smart contracts can use them.
Through this bridge, an oracle creates a data feed. From them, several decentralized services, especially in finance, can function effectively and safely.
Popular oracle providers in the blockchain world include Chainlink, DIA, the Band Protocol, Acala, and more.
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