Blockchain's Unseen Backbone Securing Billions of Dollars in Value

Oracles are the hidden data pipeline that keeps billions of dollars in value flowing—but one of the most experienced actors in the ecosystem thinks those pipelines should be more transparent and affordable.

Two years in development, Chronicle Protocol’s Scribe, launching this September, is positioned as the "next-generation oracle cryptographic primitive."

It’s the brainchild of one of the most established teams in the oracle space; Chronicle started life as the first ever oracle on Ethereum in 2017.

Originally developed to facilitate the creation of SAI, the predecessor to the DAI stablecoin, Chronicle Protocol now secures billions of dollars worth of value as the exclusive guardian of assets for MakerDAO.

Oracles and Scribe

Oracles validate external data before it's integrated into the blockchain, which can then automatically activate smart contracts when preset criteria are met.

Although the market primarily demands price data, Chronicle Protocol is not limited to this single type of information. Its architecture is built to accommodate a wide array of data categories.

What distinguishes Scribe smart contract is its approach to cryptographic signatures. This innovation enabled the Chronicle team to reduce the associated gas fees for oracle operations by 60% on Ethereum & over 68% on Layer 2s.

This reduction can be seen as a significant edge, given that oracles typically can cost between 4-9% of many DeFi protocols' yearly revenue.

Verifiability and transparency

For now, oracles face challenges including scalability, particularly on the Ethereum platform, along with issues related to transparency and genuine decentralization.

Chronicle Protocol aims to address these issues. Charting a path towards more accessible, cost-efficient, and verifiable data, Scribe offers features including subscribing and unsubscribing to oracles on-demand, calling for fresh data, verifying data sources in an open & transparent environment, and integration with any supported blockchain.

From its genesis, Chronicle Protocol was anchored in the principle of "verifiability."

“While verifiability is anticipated in blockchain technology, it’s entirely absent in oracle architectures,” Chronicle Labs Angus Tookey told Decrypt. “Addressing this discrepancy is vital to nurture transparency and engender trust in the ecosystem."

On-chain dashboard

The Chronicle Protocol team introduced the Chronicle on-chain dashboard to realize this vision. The tool offers users the ability to sift through historical price data reported from each oracle in real time.

“For instance, users could trace back to 2017, pinpointing Bitcoin’s price on August 24 at 10:20am,” Tookey told Decrypt. “They can also juxtapose data from diverse feeds and oracles, corroborating it with third-party sources.”

Chronicle also introduces the Verify function, which enables users to juxtapose the signature displayed on Chronicle’s interface with its twin on the blockchain for a specific block, ensuring a match and verifying that the reported data is legitimate.

The protocol also features intrinsic fraud proofs, serving as a safety net, and allows users to call a function that checks fraudulent activity perpetrated by a feed.

This mechanism enables the rapid and automatic banning of malevolent feeds. Once proven, the function is invoked, promptly expelling the feed from the network. Users are incentivized with Ethereum (ETH) rewards for their efforts in policing the network.

“Our protocol seamlessly marries reliable feeds, security, and decentralization, all reinforced by data sourced via consensus and an automated fraud-resistant mechanism ensuring network purity,” Tookey told Decrypt. As well as safeguarding data integrity, he added, it encourages the broader ecosystem of ‘searchers’ to “play an active role in the platform's vigilance.”

This architecture has a cascading effect; as the number of reliable feeds grows, so too does the network’s security, and thanks to Scribe, without increasing cost. It’s a virtuous cycle that also has a direct bearing on decentralization, Tookey said. “As the network continues to embrace trustworthy feeds, the architecture naturally gravitates towards a more decentralized state—a key characteristic of a robust blockchain ecosystem," he explained.