Binance, the world's largest crypto exchange by volume, launched its native oracle service on Wednesday to enable smart contracts to run on real-world inputs and outputs, starting with the BNB Chain ecosystem.
Oracles are third-party services that fetch external data to a blockchain. They are necessary as blockchains are typically an immutable store of data but cannot independently verify the authenticity of the inputted data. Oracles are therefore used to ensure that accurate data is being used on decentralized finance (DeFi) applications and similar products based on any blockchain. This data might range from pricing information to weather forecasts. Oracles can also be bi-directional, allowing them to "send" data to the outside world.
Read more: What Is an Oracle?
"Using oracles to dramatically increase the smart contract's knowledge of what's going on outside of the blockchain, allowing it to respond to external events with specified actions will be crucial," Gwendolyn Regina, investment director at BNB Chain, said in a prepared statement. "Binance Oracle will emerge as a significant contributor to Web3 by offering a stable, reliable and efficient oracle network with comprehensive accuracy and accessibility features.”
Binance said its oracle service will directly benefit some 1,400 applications running on BNB Chain, with 10 BNB Chain projects already integrated with the Binance Oracle network. The service is, however, chain-agnostic and will eventually support more blockchains as well.
Binance oracles would source price data from several centralized crypto exchanges to ensure data reliability.
The lack of reliable oracle data recently contributed toward a $100 million exploit on Solana-based lending service Mango Markets, and a $10 million exploit on Celo-based Moola. In both cases, the attacker was able to trick the protocols into releasing millions of dollars in tokens after manipulating how the oracle-dependent lending mechanisms worked on both protocols.
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