Empiric Network, a new decentralized blockchain oracle on StarkNet, has raised $7 million in a funding round led by Variant. The funding will largely go toward hiring, Empiric co-founder Karl Oskar Schulz told CoinDesk in an interview.
Other participants in the round included data partners Alameda, CMT, Flow Traders, Gemini and Jane Street plus ecosystem partners StarkWare and Polygon co-founder Sandeep Nailwal, among others.
StarkNet, a zero knowledge (ZK) rollup product addressing scalability issues for the Ethereum blockchain, was created by StarkWare, which reached an $8 billion valuation following a $100 million funding round in May. Empiric Network, co-founded by Schulz and Jonas Nelle, was developed in a strategic partnership with StarkWare.
A blockchain oracle connects smart contracts with the outside world to retrieve or send out information. Traditional oracles are centralized, meaning off-chain nodes go out and find data from multiple undisclosed sources and aggregate that data off of the blockchain. The result of the data, such as a cryptocurrency price or the readout of a sensor, is the only publicly visible item.
The lack of transparent data has raised concerns about centralized oracles, however. For example, errors with two data sources last September led to the Pyth Network oracle incorrectly reporting that bitcoin had crashed to $5,402.
“[Centralized oracles] you can kind of see, like Bank of America lending and borrowing. It works. You can trust it,” said Schulz. “But it’s not like Aave and Compound where the entire contract is on-chain. You can audit it.”
Empiric Network wanted to go to the underlying sources of decentralized data: cryptocurrency exchanges and large market makers. The startup signed partnerships with some of the biggest names in the industry – many of them investors in the current funding round – to bring their proprietary data on-chain.
The centralized oracle structure was more practical from a technological standpoint, avoiding the high gas, or transaction, fees and slow throughput of the main blockchain. StarkWare’s creation of StarkNet provided lower fees, improved transaction speeds and the ability to perform on-chain computations.
On-chain computations open the path to move decentralized finance (DeFi) metrics beyond price feeds and toward the types of data valued in traditional finance, such as risk, volatility and yield metrics.
“Let’s give DeFi the data it needs to really mature and become better. And that’s computational data,” said Schulz.
CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.