Tezos, the popular staking platform for building smart contracts and decentralized applications (Dapps) is taking another step towards decentralized finance (DeFi) with a delegated price feed oracle called Harbinger.
Tezos network is an exciting blockchain protocol with unique features like on-chain governance, Liquid Proof of Stake, and formal verification of smart contracts. The Tezos platform has announced the integration of the Harbinger price oracles as it continues to take on the DeFi space.
The Harbinger oracle is a project that delivers cryptographically signed price feeds based on real-time market data sourced from multiple exchanges. The integration by Tezos will allow the on-chain pricing data to be fed directly to the Tezos blockchain which will foster the development of further DeFi applications on the Tezos network.
The symbiosis of Harbinger and Tezos network was explained in the announcement on Aug 25:
“Tezos is a liquid proof of stake cryptocurrency network, so account holders can delegate their Tezos (XTZ) to a validator (referred to as a “baker”). Delegators receive a share of the block rewards they earn by helping to secure the Tezos network. In Harbinger, an account that pays for fees to update the price oracle can be delegated and pre-funded with Tez. This enables the development of self-sustaining price oracles, where the rewards for participating in proof of stake consensus offset the fees required to keep the oracle data current.”
Building Trust in DeFi
Price oracles are a critical element for Decentralized Finance, as the DeFi ecosystem of financial applications that are open-source and built on top of blockchain protocols. The DeFi system moves away from traditional, centralized financial services and all the intermediaries attached to them. No central intermediary also means that trust must be found outside of traditional institutions—in this sense, a cryptographically signed price feed or “oracle” becomes critical to establishing trust in the DeFi ecosystem.
The announcement reads, “Think of oracles as tunnels that link on-chain data to off-chain data, providing protocols and applications the external information that they need to function properly. Financial price data is critical to DeFi, allowing protocols to build algorithmic stablecoins, write derivatives or futures contracts, create collateralized loans, and build insurance products.”
Harbinger reportedly works differently from other oracle providers like Chainlink, as Tezos holders can leverage their XTZ staking rewards to post price data on-chain instead of paying fees. The pricing oracle is based upon Compound’s Open Price Feed and operates with major exchanges—Coinbase, Binance, OKEx, and Gemini, to name a few—acting as signers. The Harbinger oracle retrieves the pricing data from the signers and posts them to what is called the ‘storage contract’.
A volume-weighted average price is then calculated by a ‘normalizer’ smart contract and passed on to the relevant Dapp or Defi protocol. Early versions of these ‘storage contracts’ and ‘normalizer contracts’ have already been deployed on the main net by the Tezos Community.
Algorand Also Set for DeFi
The DeFi space is booming and the Algorand Foundation is also gearing up to capture a piece of the market.
As reported by Blockchain.News on Aug. 20, the Algorand Foundation announced the launch of the comprehensive smart contract capabilities that will purportedly enable DeFi developers to create Defi solutions and Dapps that “can scale to billions of users” while benefiting from the security of its base layer Algorand protocol.
According to the Algorand blog on Aug 19, restrictions around scale, transaction speeds, and high transaction fees have been barriers to mainstream blockchain adoption. Algorand’s latest upgrade of “stateful smart contracts […] removes these barriers and enables DeFi and Dapp developers to build more sophisticated solutions, scale their applications, and make the promise of a borderless economy a reality.” The layer-1 integration of stateful smart contracts joins existing capabilities such as Atomic Transfers.
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