1. Industry Foundation and Development Context: Why Oracles Are the 'Intelligence Hub' of Blockchain
The essence of blockchain is a decentralized trust machine, ensuring the immutability of on-chain data and the autonomy of the system through consensus mechanisms, cryptographic algorithms, and distributed ledger structures. However, due to its closed nature and self-consistency, blockchain inherently cannot actively access off-chain data, from weather forecasts to financial prices, from voting results to off-chain identity verification, on-chain systems cannot 'see' or 'know' changes in the external world. Therefore, oracles serve as the key bridge for information between on-chain and off-chain, assuming the critical role of 'perceiving the external world.' They are not simple data movers but the intelligence hub of blockchain—only the off-chain information provided by oracles injected into smart contracts can execute the on-chain financial logic correctly, thus connecting the real world with the decentralized universe.
1.1 The Logic of Information Islands and the Birth of Oracles
Early Ethereum or Bitcoin networks faced a fundamental problem: on-chain smart contracts are 'blind.' They can only operate based on data already written to the chain and cannot 'actively' access any off-chain information. For example: DeFi protocols cannot autonomously obtain the real-time price of ETH/USD; GameFi games cannot synchronize the scores of real-world events; RWA protocols cannot determine whether real assets (like real estate or bonds) are being liquidated or transferred.
The emergence of oracles is precisely to solve the fatal flaw of information islands. They capture data from the external world, either in a centralized or decentralized manner, and transmit it on-chain, enabling smart contracts to have 'context' and 'world states,' thus driving more complex, practical decentralized applications.
1.2 Three Key Evolution Stages: From Centralization to Modularization
The development of oracle technology has gone through three stages, each significantly expanding its role boundaries in the blockchain world:
The First Stage: Centralized Oracles: Early oracles mostly adopted a single data source + central node push model, such as early Augur, Provable, etc., but had very low security and censorship resistance, making them highly susceptible to tampering, hijacking, or failure interruptions.
The Second Stage: Decentralized Data Aggregation (Chainlink Paradigm): The emergence of Chainlink has pushed oracles to new heights. It constructs a decentralized data provision network through multiple data providers (Data Feeds) + node networks aggregation + staking and incentive mechanisms. Security and verifiability have greatly enhanced, forming the industry's mainstream.
The Third Stage: Modular, Verifiable Oracles: With growing demand and the emergence of new technologies like AI, modular oracles have become a trend, with projects such as UMA, Pyth, Supra, RedStone, Witnet, Ritual, and Light Protocol proposing innovative mechanisms including 'cryptographic verification paths (Crypto-Proofed Data),' 'ZK-Proofs,' 'off-chain computation verification,' and 'custom data layers,' enabling oracles to evolve towards flexibility, composability, low latency, and auditability.
1.3 Why Are Oracles the 'Intelligence Hub' Rather Than 'Peripheral Tools'?
In traditional narratives, oracles are often likened to the 'sensory system of blockchain,' meaning the eyes, ears, nose, and tongue of blockchain. However, in the current highly complex on-chain ecosystem, this metaphor is no longer sufficient: in DeFi, oracles determine the 'benchmark reality' for liquidation, arbitrage, and trade execution; data delays or manipulation can directly trigger systemic risks; in RWA, oracles bear the synchronization function of 'off-chain asset digital twins,' providing the only proof of the legitimate existence of real assets on-chain; in the AI+Crypto field, oracles become the 'data input mouth' for model feeding, determining whether intelligent agents can operate effectively; in cross-chain bridges and re-staking protocols, oracles also shoulder the tasks of 'cross-chain state synchronization,' 'security guidance,' and 'verification of consensus correctness.'
This means that oracles are no longer just 'sensors,' but the nerve center and intelligence network in the complex on-chain ecosystem. Their role is no longer merely 'perception,' but to establish the infrastructure core for consensus reality, synchronizing the on-chain universe and the off-chain world.
From a national perspective, data is the oil of the 21st century, and oracles are the channel controllers of data flow. Controlling the network of oracles means controlling the generation of 'reality cognition' on-chain: who defines prices, who holds financial order; who synchronizes truth, who builds cognitive structures; who monopolizes entry points, who defines the standards of 'trustworthy data.' Therefore, oracles are becoming the core infrastructure in DePIN, DeAI, and RWA modules.
2. Market Landscape and Project Comparison: A Direct Clash Between Centralized Legacies and Decentralized Newcomers
Although oracles are seen as the 'intelligence hub' of blockchain, in reality, the controller of this hub has long been in a sort of 'quasi-decentralized' monopoly state. Traditional oracle giants like Chainlink are both the creators of industry infrastructure and the biggest beneficiaries of the rules of order. However, with the rise of emerging trends like modular narratives, DePIN paradigms, and ZK verification paths, the market landscape of oracles is undergoing a noticeable power restructuring. The changes in this field are not simply product competition but a philosophical confrontation over 'who defines on-chain reality.'
The significance of Chainlink in the oracle track is akin to the symbolic status of early Ethereum in the realm of smart contracts. It pioneered the establishment of a complete network architecture based on data aggregation, node staking, and economic incentives, becoming an irreplaceable 'on-chain benchmark reality provider' after the DeFi summer. Whether it is financial protocols like Aave, Compound, Synthetix, or Layer 2 networks such as Polygon and Arbitrum, a large number of systematic operations heavily rely on Chainlink's data supply. However, this 'indispensability' also brings two aspects of hidden dangers: first, excessive reliance leads to single-point failure risks in on-chain systems; second, the transparency crisis and data censorship space brought about by implicit centralization. Although Chainlink's node network is nominally decentralized, its actual operation is often concentrated among a few validators, such as Deutsche Telekom, Swisscom, Blockdaemon, and other traditional institutional nodes; decision-making regarding its Off-Chain Reporting (OCR) mechanism, data source selection, update frequency, etc., is mostly opaque and difficult to govern by the community. It resembles a central publishing system that inputs 'trustworthy versions of reality' into the blockchain world, rather than a truly decentralized, censorship-resistant data supply market. This point has opened a window of value for later entrants.
The emergence of Pyth Network is a profound counter to the Chainlink model. Pyth does not simply replicate the traditional data aggregation paradigm but directly returns the power of data uploading to the data sources themselves, such as exchanges, market makers, and infrastructure providers. This 'first-party data source upload' model greatly reduces the relay layers of data off-chain, improving real-time performance and originality, and allowing the oracle to transform from a 'data aggregation tool' to 'original pricing infrastructure.' This is extremely attractive for high-frequency, low-latency scenarios such as derivatives trading, perpetual contracts, and blockchain game logic. However, at the same time, it raises a deeper question: many of Pyth's data sources come from crypto exchanges and liquidity providers—these participants are both information providers and market participants; whether this 'dual role' structure can truly escape price manipulation and conflicts of interest remains an unverified trust gap.
Unlike Pyth, which focuses on data sources and update efficiency, RedStone and UMA choose to take a different path by cutting into the structural layer of the oracle 'trust path' itself. The operational mechanisms of traditional oracles are often based on 'price feeding' and 'confirmation': nodes upload data and broadcast it to smart contracts, which directly use this data as a basis for state. The biggest problem with this mechanism is that there is no truly 'verifiable data path' on-chain. In other words, contracts cannot determine whether the uploaded data actually originates from the specified off-chain information source, nor can they audit whether its path is complete and neutral. The 'verifiable data packet' mechanism proposed by RedStone solves this problem: by encapsulating off-chain data in an encrypted manner into a data body with a verification structure, which is then unpacked and verified by the executing contract in real-time, thus significantly improving the certainty, security, and flexibility of on-chain data calls.
Similarly, the 'Optimistic Oracle' paradigm advocated by UMA is even more radical. It assumes that oracles themselves do not need to provide absolutely correct data every time; instead, they introduce economic games to resolve disputes. This optimistic mechanism delegates most data processing logic off-chain and only returns to on-chain governance through dispute arbitration modules when disagreements arise. The advantage of this mechanism is extremely high cost efficiency and system scalability, suitable for complex financial contracts, insurance protocols, and long-tail information scenarios, but its shortcomings are also very obvious: if the incentive mechanism design within the system is not well thought out, it can easily lead to attackers repeatedly challenging and manipulating oracle data.
Emerging projects like Supra, Witnet, and Ritual are innovating in finer dimensions: some are building bridges between 'off-chain computation' and 'cryptographic verification paths,' some are attempting to modularize oracle services to allow free nesting into different blockchain operational environments, and others are entirely rewriting the incentive structures between nodes and data sources, forming a 'custom supply chain' for on-chain trustworthy data. These projects have yet to form mainstream network effects, but they reflect a clear signal: the oracle track has moved from a 'consensus war' to a 'trust path war,' shifting from 'single price provision' to a comprehensive game of 'trustworthy reality generation mechanisms.'
We can see that the oracle market is undergoing a transformation from 'infrastructure monopoly' to 'trust diversity.' Established projects possess strong ecological binding and user path dependence, while emerging projects use verifiability, low latency, and customization as weapons to attempt to cut through the cracks left by centralized oracles. But regardless of which side one stands on, we must acknowledge a reality: whoever can define 'truth' on-chain holds the benchmark control of the entire crypto world. This is not a technical war but a battle for 'definition power.' The future of oracles is destined to be much more than just 'moving data on-chain.'
3. Potential Space and Boundary Expansion: From Financial Information Flow to On-Chain RWA Infrastructure
The essence of oracles is to provide 'verifiable reality inputs' for on-chain systems, which places them in a core role far beyond mere data transmission in the crypto world. Looking back over the past decade, oracles have evolved from initially serving the 'price feeding' function in decentralized finance (DeFi) to expanding towards broader boundaries: they are evolving from basic data providers for on-chain financial transactions to central systems for mapping real assets (RWA), bridge nodes for cross-chain interoperability, and even supporting complex structures such as on-chain law, identity, governance, and AI-generated data, becoming the 'on-chain empirical base.'
The Infrastructure of Financial Information Flow: During the golden period of DeFi's rise (2020–2022), the main role of oracles focused on 'price feeding'—providing real-time prices of external market assets for on-chain contracts. This demand spurred the rapid development of projects like Chainlink, Band Protocol, and DIA, also giving birth to the first generation of oracle standards. However, in actual operations, the complexity of DeFi contracts has continuously escalated, forcing oracles to 'go beyond prices': insurance protocols require climate data, CDP models need economic indicators, perpetual contracts require volatility and transaction volume distributions, and structured products need complex multi-factor data. This marks the evolution of oracles from price tools to the access layer of diverse data sources, gradually becoming 'systematic.'
Furthermore, with projects like MakerDAO, Centrifuge, Maple, Ondo, etc., massively introducing off-chain debts, national bonds, fund shares, and other real assets, the role of oracles is beginning to evolve into trustworthy registrars of on-chain RWA (Real-World Assets). In this process, oracles are no longer merely 'input data pipelines' but have become the certifiers, state updaters, and yield distributors of RWA on-chain—neutral systems with 'fact-driven capabilities.'
The Trustworthiness of On-Chain RWA: The biggest issue with RWA has never been 'technical difficulty' but 'how to align on-chain representations with off-chain legal and asset states.' In traditional systems, this consistency is ensured by lawyers, audits, regulations, and paper processes, whereas on-chain, oracles become key to reconstructing this mechanism. For example, if an on-chain bond is secured by a set of offline properties, how does the smart contract know whether the property has been seized, appraised, rented, sold, or mortgaged to someone else? All this information exists off-chain and cannot be natively on-chain. At this point, the task of the oracle is no longer simply 'to sync data,' but to build an 'on-chain trust snapshot' by connecting government registration systems, IoT devices, audit processes, and credibility mechanisms. It must continuously refresh this snapshot to ensure the consistency of contract states with real states. This capability pushes oracles towards more complex application boundaries and even requires integrating legal, physical, and political trust systems.
At the same time, we also see collaborations like RedStone and Centrifuge, which upload the cash flow, maturity status, and default information of RWA assets to the chain in a modular data format, providing atomic-level inputs for trading, risk control, liquidation, etc., in the liquidity market. The standardization and credible updating mechanisms of this data are almost equivalent to building an 'audit chip' for the financial system on-chain, forming the foundation for the entire on-chain financial ecosystem to map to reality.
The Evolution of Oracle's 'Cross-Asset Layer': Another trend worth noting is that oracles are gradually evolving from the 'data provision layer' of assets to the 'cross-asset coordination layer.' Against the backdrop of the rapid rise of cross-chain protocols like LayerZero and Wormhole, the single-chain data barriers have begun to be broken, but there still exists a serious gap in the synchronization of asset states. For example, a stablecoin on Ethereum may rely on a liquidation price on Arbitrum, while a structured product on Solana may involve the yield from RWA debts on Polygon. This multi-chain interactive financial structure requires a 'logical hub' to coordinate the acquisition, updating, verification, and broadcasting of data. Future oracles, especially those supporting cross-chain deployment, off-chain collaboration, and contract composability, will resemble a 'chain-based API platform'—not just providing data but also possessing the ability to invoke, verify, convert, integrate, and distribute, thus becoming the data intelligence layer of the entire Web3 application layer.
As oracles achieve stability in RWA, the next boundary will be the data mapping of 'people' and 'behavior.' In other words, they will not only record the 'state of things' but also capture 'human behavior'—on-chain credit systems, DID (decentralized identity), on-chain litigation arbitration, and even the authenticity verification of AI-generated content will all require 'auditable on-chain input.' This direction has already begun to show signs in projects like EigenLayer, Ritual, and HyperOracle: they either allow oracles to verify off-chain model performance, or integrate AI model outputs into on-chain element processes, or allow auditors to assume factual responsibility through staking models.
This trend indicates that the boundaries of oracles have expanded from 'financial information flow' to the entire data spectrum of 'on-chain order generation,' becoming the infrastructure for the real world to move towards on-chain civilization. It is no longer merely a sounding board for transmitting prices but a digital bridge connecting information, value, and trust.
4. Outlook on Trends and Investment Suggestions: Structural Opportunities are Here, Focus on Three Directions
The technical maturity and industry attention towards oracles often exhibit a characteristic of 'non-linear cyclical crossing'—after public chain infrastructure enters the phase of stock competition, it, as the most core 'data base' linking the real world on-chain, instead welcomes a stronger strategic position. Whether it is the rise of Layer2, the landing of RWA, or the integration of AI and on-chain computation, oracles have become the 'trust anchor' that cannot be bypassed. Therefore, looking forward to the next three years, the investment logic in the oracle track will shift from 'market capitalization fantasies during speculation phases' to 'revaluation of cash flow value brought by structural growth.'
4.1 Structural Trends are Clear, Supply and Demand Curves are Rematched
As traditional financial institutions accelerate their integration with on-chain protocols, the off-chain real-world asset status, legal status, and behavioral status must enter the on-chain system in a structured, standardized, and verifiable manner. This trend brings two fundamental changes:
The demand for high-frequency, customized data streams has surged dramatically; oracles are no longer simple price relay systems but are now computational nodes that support a series of complex logics (such as automatic liquidation, yield mapping, state changes);
The 'economic attributes' of data are becoming more prominent, with its pricing model gradually transitioning from 'Gas costs + node incentives' to 'B2B enterprise-level subscriptions + SLA data agreements + commercial contract liabilities,' forming a stable cash flow.
The leap in supply-demand relations directly drives the project's valuation model from 'narrative-driven' to 'revenue-driven,' providing new investment anchor points for long-term holders and strategic funds. Especially for leading RWA projects, AI computing chains, and DID architectures, choosing reliable, stable, and high-throughput oracle service providers has become an indispensable dependency at the contract level.
4.2 Three Key Directions with Long-Term Alpha Potential
In this new development paradigm, we suggest focusing attention on three types of oracle development paths, each representing the extended capabilities of oracles as on-chain 'intelligence hubs' in different dimensions:
1) Modular, Application-Side Native Oracles: Closely Aligned with Business Equals Closely Aligned with Value: Compared to traditional 'general-purpose' oracle models, new generation projects like RedStone, PYTH, and Witnet emphasize 'on-demand service' and 'on-site deployment', embedding oracle logic into application contracts or VM layers. This model better matches the needs of high-frequency trading and structured asset protocols, and also makes data transmission faster, responses more accurate, and costs lower. The advantage of such projects lies in their inherent 'product-protocol' stickiness; once a DeFi or RWA project chooses a particular oracle, its migration cost is extremely high, meaning medium- to long-term binding returns and defensive moats.
2) The Narrative of AI and Oracle Integration: Verification, Filtering, and Fact Generation Interface Layer: As AI models widely intervene in the crypto ecosystem, how to verify the authenticity of their generated content, behavioral predictions, and external calls has become an unavoidable foundational issue. Oracles are the 'logical anchor point' for this problem: they not only provide data but can also verify whether the data comes from a trustworthy computing process and whether it meets multi-party consensus mechanisms. Projects like HyperOracle, Ritual, and Aethos have begun to attempt to provide 'provable AI invocation results' for on-chain contracts through methods such as zkML, trusted hardware, and cryptographic inference, integrating them into on-chain processes in the form of oracles. This direction has high technical barriers and high capital attention, making it a potential point of ignition for the next round of high beta.
3) RWA and Identity-Bound Oracles: Off-Chain Legal Status Mappers: From the asset universal message standard established by the collaboration between Chainlink and Swift, to the synchronization of multi-asset yield statuses on Centrifuge, and the introduction of third-party evaluation models by Goldfinch, RWA is rapidly constructing a credible mechanism relying on a 'neutral information layer.' The core of this mechanism depends on the oracle systems that can reliably bring off-chain legal, asset registration, and behavioral credit information on-chain. Such projects lean more towards 'infrastructure' logic, with development paths highly related to regulatory policies, but once an industry standard is formed (like Chainlink's CCIP), they possess exponential network effects, making them suitable for long-term layout as 'grayscale consensus assets.'
4.3 Reconstructing Investment Logic: From 'Price Feeding Narrative' to 'On-Chain Order' Pricing
In the past, the market often regarded oracles as 'ancillary tools of the DeFi hot track,' with market capitalization assessments and investment behaviors mostly fluctuating with the overall market. However, in the future, oracles themselves will gradually gain independent valuation mechanisms because: they play an irreplaceable role as factual injectors in on-chain protocols; they possess stable, measurable sources of protocol revenue (such as Chainlink's data pricing model has formed a B2B commercial subscription logic); and they undertake underlying information coordination tasks in multiple structural growth tracks such as RWA, AI, and governance, having multiplier effects.
Therefore, we recommend that investors not only assess projects based on 'market capitalization size' or 'trading popularity,' but filter oracle assets with long-term value potential based on the following three main lines: whether they have a deep native binding with protocols, chains, and financial institutions; whether they have established a commercial closed loop of 'data-facts-consensus'; and whether they possess scalability advantages in next-generation scenarios (RWA, AI, cross-chain).
In summary, oracles are no longer the supporting characters on the periphery of crypto narratives but are gradually becoming the 'fact benchmark system' and 'order generation engine' of the on-chain world. Structural opportunities have already formed, and investment logic urgently needs to be restructured.
5. Conclusion: The Structural Dividend Era of the Oracle Track has Arrived
The oracle track is at the forefront of the evolution of the blockchain ecosystem, playing a core role in bridging information between the on-chain world and the real world. As the complexity of on-chain applications and the demand for real assets on-chain increase, oracles are no longer merely price data providers but have become the 'intelligence hub' and 'order generation engine' for the credible execution of smart contracts. The multi-dimensional enhancement of technology and the deepening of application scenarios have brought unprecedented development space and value reassessment opportunities for oracles.
In the future, oracle projects will develop towards more decentralized, modular, and scenario-based directions. The fusion of AI and on-chain data, as well as the on-chain process of RWA, will inject continuous growth momentum. Investors should evaluate the value of oracle projects from three dimensions: on-chain protocol binding, commercial model closed loops, and scalability, focusing on innovative forces with long-term moats and structural growth potential. Overall, the oracle track has gradually shifted from a supporting role to the 'intelligence hub' of the blockchain world, and its ecological value and investment opportunities should not be overlooked; the structural dividend era has already arrived.
