The concept of enshrined oracles isn’t new. It has been an ongoing topic of research and experimentation in the blockchain space, with many developers and researchers recognizing both the potential benefits and inherent challenges of enshrined oracles.

What are Enshrined Oracles?

In the blockchain ecosystem, “enshrined” refers to integrating specific functionalities directly into the foundational layer (Layer 1) of the blockchain itself. Unlike external or add-on services, enshrined features become an intrinsic part of the blockchain’s core operations, offering built-in security, reliability, and decentralization.

Enshrined Oracles in Ethereum

Ethereum, the leading smart contract platform, has been considering enshrined oracles for several years, with discussions surfacing as early as 2020. The vision is to provide decentralized applications (dApps) with native price feeds directly within the Ethereum protocol. These enshrined oracles offer notable benefits, such as significantly stronger immutability guarantees compared to external oracles.

However, the proposal sparked concerns about the potential impact on protocol neutrality. Vitalik Buterin, co-founder of Ethereum, was initially skeptical about enshrined oracles, fearing they might violate Ethereum’s “credibly neutral” position. But over time, he shifted his perspective, now supporting their inclusion as a way to enhance the network’s efficiency and security.

Why this matters: Performance is not the only problem

The development of oracles has shaped the broader blockchain landscape, highlighting the critical role oracles play as bridges between off-chain data and on-chain applications. While improving traditional performance metrics such as speed, cost, and accuracy is important, the real challenge lies in designing oracles that are decentralized, permissionless, and trustworthy.

Unfortunately, this aspect of oracle design hasn’t received enough attention, yet it is key to creating a secure, decentralized data layer for blockchain ecosystems.

The Problems with Third-Party Oracles

Current third-party oracle services rely on off-chain networks of nodes to provide data. For example, an oracle network might utilize 10 independent data providers, but only a subset of these nodes might contribute to any given price feed, as illustrated below. This inconsistency can undermine data reliability and decentralization.

Research shows that in some cases, as few as five data providers are used for some price feeds – creating an extremely low threshold for collusion.

Given that billions of dollars in decentralized finance (DeFi) rely on such oracles, this creates potential points of failure and manipulation that exist outside the blockchain’s direct control.

Additionally, developers also face significant obstacles with third-party oracles:

• Security Concerns: The design of third-party oracles requires developers to vet the reliability and security of each and every oracle feed before launching their product, adding complexity to the development process. Additionally, the security of each feed can vary in time, adding even more complexity.
• Cost: Many premium oracle services are expensive, with annual costs running into the millions, adding significant financial strain to blockchain projects.

Flare’s Solution

To address these challenges, Flare has developed two enshrined oracles to address the limitations of traditional systems:

1. Flare Time Series Oracle (FTSO): This oracle provides up to 1,000 price feeds, updating with each block (approximately every 1.8 seconds).
2. Flare Data Connector (FDC): It delivers verifiable, secure data from both connected blockchains and Web2 APIs.

These oracles are enshrined into Flare, ensuring stronger security and performance:

• Dual-role validators: Flare’s validators double as both validators and data providers. There are 100 infrastructure providers contributing to every single price feed.
• Staked and delegated FLR: Approximately 67% of Flare’s circulating token supply is either staked or delegated to secure these infrastructure providers, giving the oracle system the same security guarantees as the blockchain itself.

This design eliminates the need for external tokens or separate security mechanisms, integrating the oracle’s security directly into the blockchain.

Key Benefits of Flare’s Enshrined Oracles

Flare’s enshrined oracle system offers several distinct advantages over third-party oracles:

• Security: The oracle system shares the same security model as the blockchain, ensuring a decentralized and manipulation-resistant data layer. This reduces external risks and strengthens the overall trust in the data feeds.
• Speed: Enshrined oracles operate at the same speed as the blockchain, with updates occurring every 1.8 seconds. This near-instantaneous data is essential for time-sensitive DeFi applications and cross-chain interactions.
• Free Data Access: Traditional oracles often charge for data feeds, but Flare’s enshrined oracles provide data for free. The network benefits from the increased usage of data by dApps, generating transaction fees that support network operations.
• Design Flexibility: Enshrining the oracle directly into the blockchain unlocks design flexibility. Flare can optimize the chain for more efficient data handling and cost minimization. For example, Flare can offer gas rebates for submitting prices during high-traffic periods, helping to balance network load and reduce overall costs.

The Future: Flare’s Continued Innovation

Flare isn’t stopping with its current enshrined oracle offerings. The upcoming FTSOv2 will further improve the system by enhancing both the speed and capacity of data delivery. This update will allow developers to access more data, faster, and with greater flexibility than ever before.

Enshrined oracles mark a significant evolution in blockchain technology, offering secure, decentralized, and cost-effective data solutions. Flare is leading the charge with its innovative approach, providing a robust framework that addresses the limitations of traditional oracle systems. As we continue to innovate, enshrined oracles will become a cornerstone of decentralized applications, reshaping the way blockchain ecosystems operate.