Review Pyth Oracle (PYTH) – The Best Oracle On Solana 2021
Today, we will know the basic knowledge about Native Oracle on Solana Blockchain that top-tier investors. We will know what it is and the mechanism of the Pyth Network.
What Is Pyth Network?
The Pyth protocol is designed to incentivize participants to continuously publish price updates for various products (such as BTC/USD). Each crypto-asset has a price feed so that Pyth Network will provide this price to someone’s need that continuously updates with its current price and a confidence interval representing the estimated uncertainty of the price. For example, the current BTC/USD feed may say the price is $65000 ± $50. The feed for each product is published on-chain, where it is read by consumers, who may be either blockchain-enabled programs or off-chain applications. An on-chain program produces the price feed for each product by aggregating the price feeds of individual publishers. The protocol is designed to attract publishers who are first-party data providers with the ability to source high-quality, timely pricing information.
In addition to publishing these price feeds, the Pyth protocol will allow consumers to optionally pay data fees. In exchange for these fees, consumers may receive a payout from delegators if the oracle price is inaccurate. Data fees enable projects that use the protocol’s prices to hedge against oracle inaccuracies on behalf of their users. A share of data fees goes to publishers, which enables them to monetize their data.
Overview of the Pyth protocol depicting the participants (purple ovals) and their interactions with various mechanisms (purple circles). See text for more details on each mechanism
What is the project trying to achieve?
Pyth Network will have three different sets of participants:
- Publishers publish price feeds and earn a share of data fees in exchange. Publishers are typically market participants with access to accurate and timely price information. The protocol rewards publishers in proportion to the quantity of new pricing information that they share.
- Consumers read price feeds, incorporate data into smart contracts or dApps, and optionally pay data fees. Consumers can either be on-chain protocols or off-chain applications.
- Delegators stake tokens and earn data fees in exchange for potentially losing their stake if the oracle is inaccurate.
Note that a single actor may have multiple roles in the protocol; for example, publishers may simultaneously be delegators.
What is the unique selling point?
These participants will interact via four mechanisms. All of these mechanisms will be implemented on-chain:
- Price aggregation combines the price feeds of individual publishers into a single price feed for the product. This mechanism is designed to produce robust price feeds, that is, feeds whose prices cannot be significantly influenced by small groups of publishers.
- Data staking allows delegators to stake tokens to earn data fees. The delegators in aggregate also determine the level of influence that each publisher has on the aggregate price. In addition, this mechanism determines whether delegators’ stakes are slashed. Finally, the mechanism collects data fees from consumers and distributes a share to delegators. The remainder goes into a reward pool that is distributed to publishers.
- Reward distribution determines the share of the reward pool earned by each publisher. This mechanism preferentially rewards publishers with higher-quality price feeds and reduces the likelihood that uninformed publishers will earn rewards.
- Governance determines high-level parameters of the other three mechanisms
A critical challenge is designing these mechanisms to be robust to various forms of adversarial behaviour. Three specific attacks to consider are:
- Participants could onboard as publishers and attempt to manipulate the oracle price. The price aggregation mechanism is designed to guard against this attack by limiting the influence of publishers on the aggregate price.
- Uninformed participants could onboard as publishers to earn rewards without contributing useful pricing information. The reward distribution mechanism is designed to guard against this attack by reducing the possibility that uninformed participants can earn rewards.
- Participants could pay data fees and seek to manipulate the claims process to trigger an invalid payout. The mechanism’s claims process is designed to make this attack difficult.
The mechanisms introduced above will depend on two core functions of the protocol. First, parts of the Pyth protocol will run in epochs. An epoch is several Solana slots corresponding to one week of real-time. Second, the protocol will require users to stake PYTH tokens to participate in some activities. Staking locks the user’s tokens immediately and makes them available for downstream activities at the beginning of the next epoch. At any point, stakers can request to unstake their tokens. Upon unstacking, the tokens will remain locked in the contract for the remainder of the then-current and subsequent epoch. This staking design guarantees that the quantity of PYTH tokens staked toward any given activity remains constant within an epoch. Additional mechanisms such as stake pools may enable stakers to delegate their staked tokens to another user. However, these mechanisms are not core to the protocol (and could be built as entirely separate programs), so they are not described in this whitepaper
Increase data set coverage.
- Futures and FX
- Expand TWAPs and add volatility and other data metrics
Increase data providers.
Increase supported Layer 1s.
Launch staking, rewards, & curation functionality.
- Token Name: Pyth Network
- Ticker: PYTH
- Blockchain: SOLANA
- Token Standard: SPL
- Total Supply: 10,000,000,000
PYTH Release Schedule
Allocation of locked and unlocked PYTH tokens. Locked tokens unlock monthly over 7 years with an initial 1-year cliff.
PYTH Use Case
PYTH tokens can use:
- Reward Distribution
Partners & Investors
Hopefully, through the above article, you have had an overview of Pyth Network. What do you think is the next direction of Pyth Network? What project overview do you want to learn about next? Please comment below the article to let me know!
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