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Oracles

pansay
Last edit: @pansay, December 9, 2020
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Oracles are data feeds that connect Ethereum to off-chain, real-world information, so you can query data in your smart contracts. For example, prediction market dapps use oracles to settle payments based on events. A prediction market may ask you to bet your ETH on the next president of the United States. They'll use an oracle to confirm the outcome and pay out to the winners.

Prerequisites

Make sure you're familiar with nodes, consensus mechanisms, and smart contract anatomy, specifically events.

What is an oracle

An oracle is a bridge between the blockchain and the real world. They act as on-chain APIs you can query to get information into your smart contracts. This could be anything from price information to weather reports.

Why are they needed?

With a blockchain like Ethereum you need every node in the network to be able to replay every transaction and end up with the same result, guaranteed. APIs introduce potentially variable data. If you were sending someone an amount of ETH based on an agreed $USD value using a price API, the query would return a different result from one day to the next. Not to mention, the API could be hacked or deprecated. If this happens, the nodes in the network wouldn't be able to agree on Ethereum's current state, effectively breaking consensus.

Oracles solve this problem by posting the data on the blockchain. So any node replaying the transaction will use the same immutable data that's posted for all to see. To do this, an oracle is typically made up of a smart contract and some off-chain components that can query APIs, then periodically send transactions to update the smart contract's data.

Security

An oracle is only as secure as its data source(s). If a dapp uses Uniswap as an oracle for its ETH/DAI price feed, it is possible for an attacker to move the price on Uniswap in order to manipulate the dapp's understanding of the current price. An example of how to combat this is a feed system like the one used by MakerDAO, which collates price data from a number of external price feeds instead of just relying on a single source.

Usage

Oracles as a service

Services like Chainlink offer oracles-as-a-service for you to use. They have the infrastructure in place for you to do things like:

This is an example of how to get the latest ETH price in your smart contract using a Chainlink price feed:

1pragma solidity ^0.6.7;
2
3import "@chainlink/contracts/src/v0.6/interfaces/AggregatorV3Interface.sol";
4
5contract PriceConsumerV3 {
6
7 AggregatorV3Interface internal priceFeed;
8
9 /**
10 * Network: Kovan
11 * Aggregator: ETH/USD
12 * Address: 0x9326BFA02ADD2366b30bacB125260Af641031331
13 */
14 constructor() public {
15 priceFeed = AggregatorV3Interface(0x9326BFA02ADD2366b30bacB125260Af641031331);
16 }
17
18 /**
19 * Returns the latest price
20 */
21 function getLatestPrice() public view returns (int) {
22 (
23 uint80 roundID,
24 int price,
25 uint startedAt,
26 uint timeStamp,
27 uint80 answeredInRound
28 ) = priceFeed.latestRoundData();
29 return price;
30 }
31}
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View the docs

Oracle services

Build an oracle smart contract

Here's an example oracle contract by Pedro Costa. You can find further annotation in his article: Implementing a Blockchain Oracle on Ethereum.

1pragma solidity >=0.4.21 <0.6.0;
2
3contract Oracle {
4 Request[] requests; //list of requests made to the contract
5 uint currentId = 0; //increasing request id
6 uint minQuorum = 2; //minimum number of responses to receive before declaring final result
7 uint totalOracleCount = 3; // Hardcoded oracle count
8
9 // defines a general api request
10 struct Request {
11 uint id; //request id
12 string urlToQuery; //API url
13 string attributeToFetch; //json attribute (key) to retrieve in the response
14 string agreedValue; //value from key
15 mapping(uint => string) anwers; //answers provided by the oracles
16 mapping(address => uint) quorum; //oracles which will query the answer (1=oracle hasn't voted, 2=oracle has voted)
17 }
18
19 //event that triggers oracle outside of the blockchain
20 event NewRequest (
21 uint id,
22 string urlToQuery,
23 string attributeToFetch
24 );
25
26 //triggered when there's a consensus on the final result
27 event UpdatedRequest (
28 uint id,
29 string urlToQuery,
30 string attributeToFetch,
31 string agreedValue
32 );
33
34 function createRequest (
35 string memory _urlToQuery,
36 string memory _attributeToFetch
37 )
38 public
39 {
40 uint lenght = requests.push(Request(currentId, _urlToQuery, _attributeToFetch, ""));
41 Request storage r = requests[lenght-1];
42
43 // Hardcoded oracles address
44 r.quorum[address(0x6c2339b46F41a06f09CA0051ddAD54D1e582bA77)] = 1;
45 r.quorum[address(0xb5346CF224c02186606e5f89EACC21eC25398077)] = 1;
46 r.quorum[address(0xa2997F1CA363D11a0a35bB1Ac0Ff7849bc13e914)] = 1;
47
48 // launch an event to be detected by oracle outside of blockchain
49 emit NewRequest (
50 currentId,
51 _urlToQuery,
52 _attributeToFetch
53 );
54
55 // increase request id
56 currentId++;
57 }
58
59 //called by the oracle to record its answer
60 function updateRequest (
61 uint _id,
62 string memory _valueRetrieved
63 ) public {
64
65 Request storage currRequest = requests[_id];
66
67 //check if oracle is in the list of trusted oracles
68 //and if the oracle hasn't voted yet
69 if(currRequest.quorum[address(msg.sender)] == 1){
70
71 //marking that this address has voted
72 currRequest.quorum[msg.sender] = 2;
73
74 //iterate through "array" of answers until a position if free and save the retrieved value
75 uint tmpI = 0;
76 bool found = false;
77 while(!found) {
78 //find first empty slot
79 if(bytes(currRequest.anwers[tmpI]).length == 0){
80 found = true;
81 currRequest.anwers[tmpI] = _valueRetrieved;
82 }
83 tmpI++;
84 }
85
86 uint currentQuorum = 0;
87
88 //iterate through oracle list and check if enough oracles(minimum quorum)
89 //have voted the same answer has the current one
90 for(uint i = 0; i < totalOracleCount; i++){
91 bytes memory a = bytes(currRequest.anwers[i]);
92 bytes memory b = bytes(_valueRetrieved);
93
94 if(keccak256(a) == keccak256(b)){
95 currentQuorum++;
96 if(currentQuorum >= minQuorum){
97 currRequest.agreedValue = _valueRetrieved;
98 emit UpdatedRequest (
99 currRequest.id,
100 currRequest.urlToQuery,
101 currRequest.attributeToFetch,
102 currRequest.agreedValue
103 );
104 }
105 }
106 }
107 }
108 }
109}
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We'd love more documentation on creating an oracle smart contract. If you can help, create a PR!

Further reading

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