The Oracle Machine track is stirring again: opportunities and challenges coexist.

2025-07-12 23:50:47

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Reevaluating the Oracle Machine: Opportunities and Challenges

With Vitalik recently mentioning the issue of the ultimate Oracle Machine in his article, oracles have once again become the focus of the crypto community. Currently, oracles play an irreplaceable role in various fields such as insurance, finance, random predictions, and the Internet of Things. As long as off-chain data remains valuable, middleware like oracles will continue to play a key role in the Web3 ecosystem, specifically reflected in the following aspects:

With the continuous development of the Web3 ecosystem, the increasing number of dapps and platforms will drive the demand for Oracle Machine data source calls and APIs to expand. In the future, dapps, especially decentralized exchanges, are likely to integrate multiple Oracle Machines to obtain off-chain metadata, in order to avoid unbearable losses caused by delays or attacks from a single Oracle Machine.
In terms of investment opportunities, although traditional DeFi's reliance on data feed Oracle Machine is unlikely to shake Chainlink's monopoly position in the short term, there remains about 10% of the market for a second competitor. Additionally, innovative protocols and narratives worth noting have emerged in subfields such as L2, credit, NFTs, and DID.
Based on the experience of DEX and L1, from the perspective of incremental market demand and L2/ZK as well as emerging scenarios, the Oracle Machine track is unlikely to be monopolized by a single winner in the long run. There are still significant growth potential and market space worth exploring in directions such as off-chain computing scenarios, pricing of non-standard on-chain assets like NFTs, and the deep integration of AI/ML.

Interpreting Oracle Machine

concept

The Oracle Machine is middleware that provides reliable off-chain data services for blockchain projects. Its main role is to connect on-chain and off-chain data, injecting more trust into the blockchain.

Currently, the amount of data off-chain and on-chain is still very uneven, and the amount of data in the on-chain world is far from sufficient to support its complete independent development away from the off-chain. Most protocols would struggle to survive without access to Oracle Machines.
The Oracle Machine is regarded as the "necessary evil" of blockchain. In the future, when on-chain data is rich enough, there may no longer be a need to rely on relay agents like Oracle Machines. This is also the fundamental reason why many DEX and DeFi protocols are committed to on-chain native designs without Oracle Machines.

The key issue that the Oracle Machine addresses is not how to obtain information from the real world, but how to help the blockchain trust information coming from the real world. The intrinsic value of the Oracle Machine lies in its ability to inject trust into off-chain data by forwarding, verifying, and filtering information. To assess the quality of an Oracle Machine, the key lies in understanding how trustworthy it is to a certain extent.

application scenarios

The Chainlink 2.0 white paper introduces the concept of a decentralized Oracle Machine network (DON) and launches services such as VRF, Keepers, and CCIP, expanding the application scenarios of the Oracle Machine in Web3:

DeFi: Price Feed ( VWAP ), Fair Ordering ( anti-MEV )
NFT: Community Airdrop ( VRF ), Price Feed ( TWAP )
GameFi: Random scene generation in-game (VRF)
Social: User Profile, User Side Profile ( DID )
DAO: Community Airdrop, Community Governance ( DID )
Cross-chain: Cross-chain information, asset transfer

Track Map

The Oracle Machine can be classified from three dimensions:

Specific functions: DeFi Oracle Machine, Credit Oracle Machine, NFT Oracle Machine, Identity ( DID ) Oracle Machine, etc.
Data Sources: First-party Oracle Machine, Third-party Oracle Machine, Multi-party Oracle Machine.
Data processing methods: Oracle Machine based on game theory, reputation, staking, cryptography, and aggregation.

Investment Opportunity Expectations

Opinion

In the traditional DeFi data feeding price sector, it is difficult to break the Chainlink monopoly in the short term, which occupies 80-90% of the market (. However, there is still a second-place competition opportunity in the remaining approximately 10% of the market:

Innovation in consensus mechanisms, such as those based on game theory combined with PoS/PoW, or DAO committees/decentralized court forms.
The cost-performance ratio has significantly improved, such as feeding prices or generating random numbers being cheaper than Chainlink.

Niche Oracle Machines, L2, credit, NFT, DID and other directions have potential:

L2 Oracle Machine: Focuses on low latency and security, suitable for high-frequency trading needs.
Credit Oracle Machine: Combining on-chain credit expansion theory, it may trigger in the next cycle.
NFT Oracle Machine: The off-chain valuation pricing scheme combined with TWAP or AI/ML shows great promise.
DID Identity Oracle Machine: Long-term high value, but currently mostly centralized solutions with low barriers.

![OKX Ventures latest research report: Rethinking Oracle Machine, the seen and the unseen])https://img-cdn.gateio.im/webp-social/moments-00394e71d87665c5f0dd80ee4b5f8e37.webp(

) Case Study

Redstone###DeFiOracle Machine(:

Permanently stored on Arweave, traceable to the data provider's reputation.
Data errors can request a refund
The feed price is much cheaper than Chainlink.

HyperOracle)L2/ZK Oracle Machine(:

Provide greater imaginative space for verifiable Ethereum computation scaling.
Non-stop node network based on ZK proof and 1-of-N trust model
The only output Oracle Machine zkAutomation service in the market

CanDID)DIDOracle Machine(:

Compatible with traditional identity systems
Secure private key backup and recovery
Achieve anti-witchcraft through MPC
Provide identity information for KYC/AML audits in a zero-knowledge manner

CreDA) Credit Oracle Machine (:

Use AI to review multi-chain activities to calculate credit ratings
Integrated off-chain credit rating provider
Generate personal loan plans based on credit ratings
On-chain credit ratings can feed back into off-chain financial activities.

Upshot)NFTOracle Machine(:

Provide accurate real-time NFT portfolio tracking and valuation
API supports building efficient trading strategies
GMI Wallet Tiered Index Helps Track Smart Money Flow in the NFT Space

Overall, with the development of blockchain technology, the Oracle Machine will continue to play an important role in the next cycle. There is significant development potential and market space in areas such as off-chain computing scenarios, pricing of non-standard on-chain assets, and deep integration of AI/ML, which are worth ongoing attention.

![OKX Ventures latest research report: Rethinking Oracle Machine, what is seen and what is not])https://img-cdn.gateio.im/webp-social/moments-5fb5ddf9c144102e930708837c407512.webp(

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