What Is Oracles Network?

It is not difficult to come by some interesting blockchain platforms capable of making a big impact. Especially when it comes to decentralization, there is a lot of progress being made. Oracles Network is one of those concepts which could have major consequences, even though it still preselects validators. Now is a good time to take a closer look at what this particular project aims to achieve.

Oracles Network is a Permissioned Network

Before anyone makes any assumptions about what Oracles Network may or may not be, we need to examine how the company positions itself. Despite what some would expect, this project serves as a permissioned, open, and public network based on the Ethereum protocol. Consensus is achieved through a protocol known as Proof of Authority. The only ones who can reach this consensus are pre-selected independent validators.

It is this latter aspect a lot of people will dislike, although there are always some caveats in this regard as well. For now, the project is still in the whitepaper stage, which means a lot can change in the future. Moreover, the project mainly focuses on horizontal scalability first and foremost. If all goes according to plan, the team will create a “swarm” of blockchains, all of which utilize Proof of Authority consensus. They will be connected by an interledger protocol, with Polkadot being one of the contenders right now.

You may be wondering what problem(s) this project tries to solve or improve, as that isn’t exactly clear. One of the main priorities is improving the transaction costs associated with public blockchain networks. It is certainly true all major public blockchains suffer from high fees these days and Ethereum is no exception in this regard at present. Then again, with the current two-pronged hard fork deploying on the network soon, it only appears to be a matter of time until this is solved. No one really needs a separate network for this specific purpose, in our opinion.

Using private actors on “public duty” to achieve consensus of an open permissioned network will always be met with some resistance along the way. The Proof of Authority consensus algorithm is, according to the team, an efficient form of Proof of Stake. By using a set of nodes explicitly allowed to create blocks and secure the blockchain, Oracles Network aims to address some of the issues public blockchains are dealing with right now.  Interestingly enough, Ethereum’s Kovan testnet uses the same algorithm, which seems to work just fine.

There is still a major difference between a testnet and a live blockchain, though. Validators for Oracles Network will not be required to hold a stake, but they do need to have a verified identity. It is this identity which will be “staked” to secure the network in exchange for rewards. This should prevent malicious actors from colluding with other validators, although only time will tell if this works as planned. Moreover, every validator is “asked” to have an active U.S. notary public license.

It is the latter point which is pretty interesting, as by only allowing individuals licensed within the U.S., Oracles Network cannot be considered to be fully decentralized. Then again, it is possible things will change in the future. For the time being, Oracles Network sounds like an interesting concept, although it is only normal that some people would take exception to how certain things are handled.