On Public Crowdsource-Based Mechanisms for a Decentralized Blockchain Oracle

Blockchain technology has created an excitement that was last seen two decades ago when the Internet was entering the mainstream. An appealing feature of blockchain technology is smart contracts. A smart contract is an executable code. It runs on top of the blockchain facilitating an agreement between untrusted parties. These smart contracts have a major limitation, namely they cannot operate on information external to the blockchain. The inability to query such information has paved the need for trusted entities called “oracles.” These oracles attest to facts without the robust security guarantees that blockchains generally provide. This can potentially harm the integrity of the network and lead to centralized points-of-failure. To address this concern, this article proposes a decentralized oracle which is based on a voting-based game that decides the truth or falsity of queries. In the context of this article, we are only interested in binary markets, i.e., queries which can be True, False, or Unknown. When requesting facts from an oracle, a user submits binary queries. Reporters (or certifiers) respond to the queries by placing monetary stake. A formal analysis of the system parameters is presented, which shows that the proposed platform incentivizes a Nash equilibrium for truthful reporting. An extension to the base protocol is also described and profiled against the original framework. Finally, we discuss a prototype architecture, along with additional features to be considered during implementation.