In-depth research report on the oracle track: the intelligence center of the world on the chain

1. Industry foundation and development context: Why oracle is the

"intelligence center" of blockchain

The essence of blockchain is a set of decentralized trust machines, which ensures the immutability of on-chain data and the autonomy of the system through consensus mechanisms, encryption algorithms and distributed ledger structures. But it is precisely because of its closedness and self-consistentness that blockchain naturally cannot actively access off-chain data. From weather forecasts to financial prices, from voting results to off-chain identity authentication, the on-chain system cannot "see" or "know" the changes in the external world. Therefore, as an information bridge between the chain and the chain, Oracle plays a key role in "perceiving the external world". It is not a simple data porter, but an Intelligence Hub of the blockchain. Only when the off-chain information provided by the oracle is injected into the smart contract can the on-chain financial logic be executed correctly, thus connecting the real world and the decentralized universe.

1.1 The logic of the birth of information islands and oracles

Both Ethereum or Bitcoin networks faced a fundamental problem: on-chain smart contracts are "blind". They can only operate based on data that has been written to the chain and cannot "actively" obtain any off-chain information. For example: DeFi protocol cannot obtain the real-time price of ETH/USD on its own; GameFi games cannot synchronize the scores of real-world events; RWA protocol cannot determine whether real assets (such as real estate, bonds) are liquidated or transferred.

The emergence of oracles is precisely to solve the fateful defects of this information island. They crawl data from the outside world and transmit it to the chain in a centralized or decentralized manner, giving smart contracts a "context" and "world state", thus driving more complex and practical decentralized applications.

**1.2 Three key evolution stages: from centralization to

modularization**

The development of oracle technology has gone through three stages, each of which significantly expands its role boundaries in the blockchain world:

The first stage: Centralized oracle: Most of the early oracles used a single data source + central node push, such as early Augur, Provable, etc., but their security and censorship resistance are extremely low, and they are easily tampered, hijacked or interrupted by failures.

The second phase: Decentralized data aggregation (Chainlink paradigm): The emergence of Chainlink pushes oracles to new heights. It builds a decentralized data provider network through multiple data providers (Data Feeds) + node network aggregation + staking and incentive mechanisms. Security and verifiability have been greatly enhanced, and the industry has also become mainstream.

The third phase: Modular, Verifiable & Modular Oracles: With the growth of demand and the emergence of new technologies such as AI, modular oracles have become a trend. Projects such as UMA, Python, Supra, RedStone, Witnet, Ritual, Light Protocol have proposed innovative mechanisms including "Crypto-Proofed Data", "ZK-Proofs", "off-chain computing verification", and "customized data layer", so that oracles can evolve towards flexibility, composition, low latency and auditability.

**1.3 Why is it said that oracles are "intelligence center" rather than

"peripheral tools"?**

In traditional narratives, oracles are often compared to the "sensory system of blockchain", namely the blockchain eyes, ears, nose and tongue. However, in the current highly complex on-chain ecosystem, this metaphor is no longer enough: in DeFi, the oracle determines the "baseline reality" of liquidation, arbitrage, and transaction execution, and data delay or manipulation will directly cause systemic risks; in RWA, the oracle undertakes the synchronization function of "off-chain asset digital twin" and is the only proof interface for real assets to exist on the chain; in the field of AI+Crypto, the oracle becomes the "data mouth" of the model feeding number, which determines whether the intelligent agent can operate effectively; in the cross-chain bridge and re-staking protocol, the oracle also shoulders the tasks of "cross-chain state synchronization", "security guidance", and "verify consensus correctness".

This means that oracles are no longer just "sensors", but neural centers and intelligence networks in complex ecology on the chain. Its role is no longer "perception", but rather the infrastructure core that establishes consensus reality and synchronizes the on-chain universe and the off-chain world.

From a national perspective, data is oil in the 21st century, while oracles are channel controllers for data flow. The network that controls oracles controls the generation of "realistic cognition" on the chain: who defines prices, who masters the financial order; who synchronizes the truth, who builds the cognitive structure; who monopolizes the entrance, who defines the standards of "trusted data". Therefore, oracles are becoming the core infrastructure in the DePIN, DeAI, and RWA modules.

2. Comparison of market structure and project: a head-on confrontation

between centralized heritage and decentralized upstarts

Although oracles are regarded as the "intelligence center" of blockchain, the controller of this center in reality has been in a state of "quasi-centralization" for a long time. The traditional oracle giant represented by Chainlink is not only the creator of industry infrastructure, but also the biggest beneficiary of order rules. However, with the rise of emerging trends such as modular narrative, DePIN paradigm, and ZK verification paths, the market structure of oracle is undergoing an explicit power reconstruction. The change in this field is not a simple product competition, but a philosophical confrontation with "who defines the reality on the chain".

The significance of Chainlink to the oracle track is similar to the symbolic status of Ethereum in the early days to smart contracts. It took the lead in establishing a complete network architecture based on the combination of data aggregation, node staking, and economic incentives, and became an irreplaceable "on-chain benchmark reality provider" after the summer of DeFi. Whether it is financial protocols such as Aave, Compound, Synthetix, or Layer 2 networks such as Polygon and Arbitrum, a large number of systematic operations rely heavily on Chainlink's data supply. However, it is precisely this kind of "incompetent" that brings two hidden dangers: one is the risk of excessive dependence that leads to a single point of failure of the on-chain system; the other is the transparency crisis and data review space brought about by implicit centralization. Although Chainlink's node network is nominally decentralized, it often focuses on a few validators in its actual operation, such as traditional institutional nodes such as Deutsche Telekom, Swisscom, Blockdaemon, etc.; and its Off-Chain Reporting (OCR) mechanism, data source filtering, update frequency selection and other decisions are mostly opaque and difficult to manage in a community. It is more like a central release system that inputs a "trusted version of reality" into the blockchain world, rather than a truly decentralized, censor-resistant data supply market. It is this that opens a value breakthrough for latecomers.

The emergence of Python Network is a deep confrontation with the Chainlink mode. Instead of copying the traditional data aggregation paradigm, Python returns the data upload power directly to the data source itself, such as exchanges, market makers and infrastructure providers. This "first-party data source upload" model greatly reduces the data's off-chain relay level, improves real-time and nativeness, and also transforms the oracle from a "data aggregation tool" to a "original pricing infrastructure." This is very attractive to high-frequency and low-latency scenarios such as derivative transactions, perpetual contracts, game logic on blockchain, etc. But at the same time, it also brings a deeper question: Python's data sources mostly come from crypto exchanges and liquidity providers - these participants are both information providers and market participants. Whether this "being both athletes and referees" structure can truly get rid of price manipulation and conflicts of interest is an unverified trust gap.

Unlike Python focusing on data sources and update efficiency, RedStone and UMA choose to take a different approach and enter the structural layer of the oracle's "trust path" itself. The operating mechanism of traditional oracles is mostly based on "price feeding" and "confirmation", that is, the node uploads and broadcasts data to smart contracts, and the contract directly uses these data as the status basis. The biggest problem with this mechanism is that there is no real "data verifiable path" on the chain. In other words, the contract cannot determine whether the uploaded data is really from the information source specified off-chain, nor can it be audited whether its path is complete and neutral. The "verifiable data packet" mechanism proposed by RedStone solves this problem: by encapsulating off-chain data into a data body with a verification structure in encryption, and depackaging and verification by executing contracts, thus greatly improving the certainty, security and flexibility of on-chain data calls.

Similarly, the "Optimistic Oracle" paradigm advocated by UMA is more radical. It assumes that the oracle itself does not need to provide absolutely correct data every time, but instead introduces economic games to resolve it when disputes arise. This optimistic mechanism hand over most of the data processing logic to off-chain, and only when there is objection, it will be reverted to the on-chain governance through the dispute arbitration module. The advantage of this mechanism lies in its extremely high cost efficiency and system scalability, which is suitable for complex financial contracts, insurance agreements and long-tail information scenarios, but its disadvantages are also extremely obvious: Once the incentive mechanism in the system is not well designed, it is very easy to have game manipulation problems such as attackers repeatedly challenge and tampering with predictions.

Emerging projects such as Supra, Witnet, and Ritual have made innovations in a more detailed dimension: some people build bridges between "off-chain computing" and "encryption verification path", some people try to modularize oracle services so that they can be freely nested into different blockchain operating environments, and some people simply rewrite the incentive structure between nodes and data sources to form a "customized supply chain" of trusted data on the chain. These projects have not yet formed a mainstream network effect, but behind it, a clear signal is reflected: the oracle track has moved from a "consensus dispute" to a "contact path dispute", and from a "single price provision" to a comprehensive game of "trust reality generation mechanism".

We can see that the oracle market is undergoing a transformation from "infrastructure monopoly" to "trust diversity". Old-established projects have strong ecological binding and user path dependence, while emerging projects use verifiability, low latency, and customization as weapons to try to cut through the cracks left by centralized oracles. But no matter which side we stand on, we must admit a reality: whoever can define the "reality" on the chain will have the benchmark control of the entire crypto world. This is not a technical war, but a "battle of definition". The future of oracles is destined to be no longer as simple as "moving data to the chain".

3. Potential space and boundary expansion: from the flow of financial

information to on-chain RWA infrastructure

The essence of oracle is to provide "verifiable realistic input" to on-chain systems, which makes it play a core role far beyond data transmission in the crypto world. Looking back over the past decade, oracles started from the "price feed" function that initially served in decentralized finance (DeFi), and are now expanding to a broader boundary: from the basic data provider of on-chain financial transactions, they evolved into a central system for real assets (RWA) mapping, a bridge node for cross-chain interoperability, and even became a "on-chain empirical base" that supports complex structures such as on-chain law, identity, governance and AI generation data.

Infrastructure of financial information flow: In the golden age of DeFi's rise (2020–2022), the main role of oracle is concentrated on "price feeding" -providing real-time prices of external market assets for on-chain contracts. This demand has promoted the rapid development of projects such as Chainlink, Band Protocol, DIA, and also spawned the first generation of oracle standards. However, in actual operation, the complexity of DeFi contracts continues to escalate, and oracles are forced to "surpass prices": insurance agreements require climate data, CDP models require economic indicators, perpetual contracts require volatility and volume distribution, and structured products require complex multi-factor data. This marks the evolution of oracle from price tools to access layers for multiple data sources, and its role is gradually being "systematized".

Further, with the large-scale introduction of off-chain debt, treasury bonds, fund shares and other real assets such as projects such as MakerDAO, Centrifuge, Maple, Ondo, the role of oracle began to evolve into a trusted registrant of on-chain RWA (Real-World Assets). In this process, the oracle is no longer just a "pipeline for inputting data", but an authenticator of RWA on-chain, a status updater, and an executor of revenue distribution - a neutral system with "fact-driven capabilities".

The root of credibility of on-chain RWA: The biggest problem of RWA is never "technical difficulty", but "how to make the on-chain representation agree with the legal and asset status off-chain." In traditional systems, this consistency is guaranteed by lawyers, audits, supervision and paper processes, and on-chain oracles become the key to reconstructing this mechanism. For example, if an on-chain bond is mortgaged by an offline property, how can a smart contract know whether the property has been seized, valued, rented, sold or mortgaged to others? All this information exists off-chain and cannot be natively linked. At this time, the oracle's task is no longer simply "synchronizes data", but builds an "on-chain trust snapshot" by connecting government registration systems, Internet of Things devices, audit processes and reputation mechanisms. It must constantly refresh this snapshot to ensure consistency between the contract state and the real state. This ability pushes oracle to more complex application boundaries, and even requires the integration of legal, physical and political trust systems.

At the same time, we have also seen that RedStone cooperates with Centrifuge to provide atomic input for transactions, risk control, liquidation, etc. in the liquid market by uploading the cash flow, maturity status, default information of RWA assets in a modular data format. This standardization and trusted update mechanism of data is almost equivalent to building an "auditation chip" for the financial system on the chain, and is the foundation for the entire chain's financial ecosystem to reality mapping.

The evolution of oracles' "cross-asset layer": Another trend worth noting is that oracles are gradually evolving from the asset "data provision layer" to the "cross-asset coordination layer". Against the backdrop of the rapid rise of cross-chain protocols such as LayerZero and Wormhole, single-chain data barriers have begun to be broken, but there is still a serious gap in the synchronization of asset status. For example, a stablecoin on Ethereum may rely on liquidation prices on Arbitrum, while a structured product of Solana, whose underlying assets may involve the yield on RWA claims on Polygon. This multi-chain interactive financial structure requires a "logical center" to coordinate the acquisition, update, verification and broadcast of data. Future oracles, especially those structured oracle systems that support cross-chain deployment, off-chain collaboration and contract combination, will be more like an "on-chain API middle platform" - it not only provides data, but has the ability to call, verify, transform, integrate and distribute, thus becoming the data intelligence layer of the entire Web3 application layer.

When the oracle gains stability on RWA, the next boundary will be the data mapping between "people" and "behavior". In other words, it will not only record the "state of things", but also capture the "human behavior" - on-chain credit system, DID (decentralized identity), on-chain litigation arbitration, and even authenticity verification of AI-generated content, which will require "audited on-chain input ports". This direction has begun to appear in projects such as EigenLayer, Ritual, HyperOracle, etc.: They either allow oracles to verify the operation results of off-chain models, or output the AI ​​model to the on-chain factor process, or allow auditors to assume factual responsibilities in the staking model.

This trend shows that the boundaries of oracles have expanded from "financial information flow" to the entire data map of "on-chain order generation", becoming the infrastructure for the real world to move towards on-chain civilization. It is no longer just a soundtrack that conveys price, but a digital bridge that links information, value and trust.

4. Trend outlook and investment advice: Structural opportunities have

arrived, focusing on three types of directions

The technological maturity and industry attention of oracles often show the characteristics of "nonlinear traversal cycle" - after the public chain infrastructure enters the stage of stock competition, it has become the core "data base" for linking the real world on the chain, but instead has ushered in a stronger strategic position. Whether it is the rise of Layer2, the implementation of RWA, or the combination of AI and on-chain computing, oracles have become "trust anchors" that cannot be bypassed. Therefore, looking forward to the next three years, the investment logic of the oracle track will shift from "market value imagination in the hype stage" to "revaluation of the cash flow value brought by structural growth."

**4.1. The structural trend is clear and the supply and demand curves

are rematched**

With the accelerated integration of traditional financial institutions and on-chain protocols, the real-world asset status, legal status and behavioral status of the off-chain real world must enter the on-chain system in a structured, standardized and verifiable way. This trend brings two fundamental changes:

The demand for high-frequency and customized data streams has increased sharply. Oracles are no longer simple price relay systems, but computing nodes that support a series of complex logic (such as automatic clearing, revenue mapping, and state changes);

The "economic attributes" of data are more prominent, and its pricing model gradually transitions from "Gas cost + node incentive" to "B2B enterprise-level subscription + SLA data protocol + commercial contract responsibility", forming stable cash flow.

The leap in supply and demand relationship directly drives the project valuation model from "narratively driven" to "income driven", and also provides a new investment anchor for long-term holders and strategic funds. Especially for top RWA projects, AI computing chains, and DID architectures, choosing reliable, stable, and high-throughput oracle service providers is an irreplaceable dependency at the contract level.

4.2. Three key directions have long-term alpha potential

Under this new development paradigm, we recommend focusing on the development paths of three types of oracles, which represent the extension capabilities of oracles as the "intelligence center" on the chain in different dimensions:

1. Modular and application-side native oracle: close to business is close to value: Compared with the traditional "general" oracle model, new generation projects such as RedStone, PYTH, and Witnet emphasize "on-demand services" and "on-site deployment", embedding oracle logic into the application contract or VM layer. This model can better match the needs of high-frequency trading and structured asset protocols, and also make data transmission faster, more accurate response and lower cost. The advantage of this type of project is that it has natural "product-protocol" stickiness. Once a DeFi or RWA project selects a certain type of oracle, its migration cost is extremely high, which means medium- and long-term binding returns and defensive moat.

2. The integration of AI and oracle narrative: the interface layer of verification, filtering and fact generation: With the extensive intervention of AI models in the encryption ecosystem, how to verify the authenticity of its generated content, behavior prediction and external calls has become an inevitable basic problem. The oracle is the "logical anchor" of this problem: it not only provides data, but also verifies whether the data comes from a trusted computing process and meets the consensus mechanism of multiple parties. Projects such as HyperOracle, Ritual, Aethos, etc. have begun to try to provide "proveable AI call results" for on-chain contracts through zkML, trusted hardware, encrypted inference, etc., and access them on the chain in the form of oracles. This direction has high technical barriers and high capital attention, which is a potential trigger point for the next round of high beta.

3. RWA and identity-bound oracle: off-chain legal status mapper: From the common asset message standard for Chainlink and Swift, to the synchronization of multi-asset income status on Centrifuge, to the introduction of a third-party evaluation model by Goldfinch, RWA is rapidly building a trusted mechanism that relies on the "neutral information layer". The core of this mechanism is the oracle system that can trust the off-chain laws, asset registration, behavioral credit and other contents. This type of project is more inclined to the logic of "infrastructure" and its development path is highly related to regulatory policies. However, once an industry standard (such as Chainlink's CCIP) is formed, it has an exponential network effect and is a "grayscale consensus asset" suitable for long-term layout.

**4.3. Investment logic reconstruction: from "price feeding narrative"

to "on-chain order" pricing**

In the past, the market often used oracles as an "accompany tool of DeFi hot track", and market value evaluation and investment behavior mostly fluctuated with the market. But in the future, the oracle itself will gradually obtain an independent value evaluation mechanism, because it plays an irreplaceable fact injector in the on-chain protocol; it has a stable and valuable protocol revenue source (such as Chainlink's data pricing model has formed B2B business subscription logic); it undertakes the underlying information coordination task in multiple structural growth tracks such as RWA, AI, and governance, and has a multiplier effect.

Therefore, we suggest that investors should not only evaluate projects from the "market value size" and "transaction popularity", but should screen oracle assets with long-term value potential from the following three main lines: whether they have native deep binding with protocols, chains, and financial institutions; whether they have established a "data-fact-consensus" business closed loop; and whether they have scalability advantages in next-generation scenarios (RWA, AI, cross-chain).

In summary, oracle is no longer a supporting role on the edge of encrypted narrative, but is gradually becoming the "fact baseline system" and "order generation engine" of the on-chain world. Structural opportunities have been formed, and the investment logic needs to be reconstructed urgently.

5. Conclusion: The era of structural dividends of the oracle track has

arrived

The oracle track is standing at the forefront of blockchain ecological evolution, and is taking on the core role of bridging information between the on-chain world and the real world. With the increase in the complexity of on-chain applications and the demand for real assets on-chain, oracles are no longer just price data providers, but have become the "intelligence center" and "order generation engine" for the trusted execution of smart contracts. The multi-dimensional improvement of technology and the in-depth expansion of application scenarios have brought unprecedented development space and value revaluation opportunities to oracles.

In the future, the oracle project will develop towards more decentralization, modularization and scenario-based directions. The integration of AI and on-chain data and the on-chain process of RWA will inject continuous growth momentum into it. Investors should examine the value of oracle projects from three dimensions: on-chain protocol binding, business model closed loop and scalability, and focus on innovative forces with long-term moats and structural growth potential. Overall, the oracle track has gradually shifted from supporting roles to the "intelligence center" in the blockchain world. Its ecological value and investment opportunities cannot be ignored. The era of structural dividends has arrived.