Introduction
Meet Liam, a serial entrepreneur who has recently embarked on a new venture named ChainDex His latest endeavour focuses on establishing a Web3 company specializing in cryptocurrency exchange services. While Liam's venture has been progressing smoothly with his current oracle service, the ever-growing competition in the industry has compelled him to seek ways to distinguish his platform further. Currently, he faces three significant challenges: high gas fees, the need for cross-chain compatibility, and ensuring data accuracy.
This is when he meets Atharva at a football screening. Atharva is a blockchain developer who writes about cool new things happening in the blockchain world. He shares his experience with working in the blockchain space, and here's how to conversation unfolds:
Atharva: As the blockchain landscape continues to evolve, we witness the emergence of new protocols and ongoing developments aimed at enhancing the security and reliability of blockchain technology, which is undoubtedly a positive trend. However, there appears to be a relative lack of emphasis on improving the underlying infrastructure. While there is an effort to increase the cost-efficiency of blockchain, there should also be a parallel focus on enhancing the transparency, resilience, and cost-effectiveness of oracles. Unfortunately, only a limited number of companies are currently doing it.
Liam: I agree with you Atharva! I run a crypto exchange firm, our entire operation heavily relies on the data provided by the oracles. In high-volatility markets, the gas fees are so high we pump in thousands of dollars just as gas fees. We are not exactly sure how the oracles work behind the scenes, we treat it as a black box hoping we get accurate prices, which is not sustainable. Since we operate on multiple chains and our Oracle provider does not provide cross-chain compatibility we face issues scaling our platform. I wish there was a solution for this.
What on earth is the Chronicle Protocol?
Atharva: I've got a fantastic solution that could be of great help to you! Chronicle Labs has recently entered the scene. This Oracle infrastructure company has its roots dating back to 2017 when it was originally established as part of Maker DAO is now available for everyone. They believe in revolutionizing the Oracle landscape by making it more transparent, resilient, cost-effective and truly decentralized.
Liam: Given that they are relatively new, can we trust their reliability?
Atharva: Chronicle is one of the leading Oracle Providers with an impressive TVS (Total Value Secured) of $9 Billion making it the second largest Oracle provider after Chainlink. Chronicle's founder - Niklas Kunkel, was one of the founding members of Maker DAO. He led the engineering team that created DAI (stablecoin), decentralized oracles, Blockchain data caching middleware, etc. So you know, he's someone you can rely upon.
Liam: That's fascinating! This certainly draws my interest. However, what sets Chronicle apart from other Oracle providers, and why should I consider them as my choice?
Why Chronicle?
Transparency
Atharva: As you rightly pointed out, oracles have historically been something of a mystery, functioning as a black box where you simply hope for accurate data without any means to verify its correctness. This is precisely where the Chronicle Protocol stands out in terms of transparency. The concept of transparency in the field of Web 3 can be somewhat multifaceted. It can encompass various layers, depending on who has access to the data. The key question here is whether you need to be a technical wizard to access this data, or if it's user-friendly and accessible to individuals like you and me.
Liam: Can you show me, what level of transparency does Chronicle provide?
Atharva: Sure! Let me walk you through their dashboard which provides a user-friendly way to track your oracles.
Visit the Chronicle Labs Dashboard, where you can monitor the prices from multiple oracles. For now, we'll focus on viewing the ETH/USD price oracle.
You can view a graph displaying the ETH/USD price fluctuations:
As you scroll down, you'll find a list of prices supplied by different feeds (also known as validators). The feed that offers a median value is the one selected. In our case, we've chosen to accept the feed provided by 0x.
You have the option to click on verify to authenticate the message. It features a user-friendly interface designed to handle the signature verification process for you. If the signature proves valid, it will display a green confirmation message. Otherwise, if the signature is invalid, you'll receive a red error message. To demonstrate this we manually changed the age of the message and got an error.
Furthermore, you also can inspect the validators from which a specific validator has sourced its data.
This takes transparency to a whole new level, making it easy for normal individuals like you and me to verify the actual source of data no longer making oracles seem like a black box.
Cross Chain Compatibility
Liam: In our platform, we provide support for multiple blockchains. Can the Chronicle Protocol accommodate this requirement?
Atharva: Absolutely! The engineering team at Chronicle has come up with a solution that helps the use of one implementation across multiple blockchains. So instead of creating a hyper-optimized oracle for one blockchain, which won't be that practical, they chose to build a pretty optimized implementation that would work for all blockchains.
Reduced Gas costs
Liam: Our biggest problem is the very expensive transaction fees, especially when the network is crowded. Sometimes, we have to spend a lot of money, even thousands of dollars, just to pay these fees. How does the Chronicle Protocol deal with this problem?
Atharva: The Chronicle protocol leverages an Optimistic Schnorr Algorithm, which consolidates multiple signatures from validators into a single super signature. This approach means you only need to verify one signature instead of numerous individual ones, leading to a significant reduction in gas fees. Thanks to the Optimistic Schnorr Algorithm, they achieve over a 50% reduction in gas fees in Layer 1 (L1) and more than 60% in Layer 2 (L2). You can have a look at the statistics comparing the gas costs of Chronicle with other Oracle providers, shared by Niklas Kunkel in a recent conference:
Liam: Impressive! This seems like a groundbreaking approach. What sets Chronicle Protocol apart from other Oracle Providers?
Chronicle vs. Other Oracle Providers
Atharva: To truly appreciate Chronicle Protocol's uniqueness, it's essential to know how a typical oracle model operates. In this model, when you have a set of validators, each one proposes a value and generates an individual signature. For example, let's say a specific validator claims that the ETH/USD value at a particular timestamp is $1609. These validators then sign their respective assertions, turning them into attestations. Now, the distinction lies in how other Oracle providers handle this process. They typically verify each attestation individually. This approach not only incurs high computational costs for Layer 1 but also demands additional storage resources for Layer 2, making it a costly proposition.
Layer 1 - Cheap Memory, Expensive Computing
Layer 2 - Expensive Memory, Cheap Computing
There is a direct correlation between cost and the number of validators involved, where an increase in the number of validators results in higher costs. Other Oracle providers compromise by limiting the number of validators to align with their budget constraints. However, this approach may potentially compromise the security of the oracle. This is precisely where Chronicle distinguishes itself. They've achieved a constant-time process. This signifies that regardless of the number of validators in play, the time required remains consistent and does not vary.
Liam: This almost sounds too good to be true! Could you shed some light on the technical wizardry behind their ability to achieve this?
Taking a look under the hood
Atharva: Rather than going through the process of individually verifying each attestation, Chronicle uses a Signature Aggregation Schema. In simple terms, instead of dealing with multiple signatures, they consolidate them into one super signature. Consequently, regardless of the number of validators involved, you're left with just this one super signature. This significantly reduces costs, making it efficient.
Liam: The real challenge here lies in having an affordable signature schema for verification. The prevailing trend leans towards BLS, but a critical issue is that the versions natively supported by most chains are insecure. Therefore, if you intend to employ it for signature aggregation, you would require a dedicated resolver, which can be very expensive.
Atharva: Absolutely! That's precisely why they've chosen to implement the Schnorr Algorithm. Schnorr has proved effective in the Bitcoin network over several years, demonstrating its ability to handle substantial workloads. Unlike BLS, the beauty of Schnorr lies in its ability to verify signatures without expanding on computational costs, making it an incredibly cost-effective choice.
Liam: Is there a mechanism in place that validators employ to prove the authenticity of their data?
Atharva: To address this, they've implemented the Optimistic Schnorr Algorithm. Here's how it works: once the validators have computed the super signature, one of them takes on the responsibility of assuring the accuracy of the data. As a result, the oracle contract's role is simplified to merely verifying the Schnorr signature provided by the validator, making the execution process highly cost-efficient.
Liam: So, how do they figure out the final price in the end?
Atharva: They set a period called Optimistic Delay If no one questions the optimistic price during this time, it becomes the canonical price.
Liam: One significant hurdle with the optimistic approach is identifying fraudulent validators. What happens if a validator attempts to provide false data?
Atharva: Throughout the Optimistic Delay period, all that's needed is to execute the Schnorr signature validation function, which incurs minimal gas fees. If a fraudulent signature is detected, the validator responsible is removed from the validator set. This mechanism enhances Chronicle's reliability significantly.
Conclusion
Liam: You've truly sold me on this. Chronicle Protocol appears to be the much-needed solution that not only aligns with my own needs but also has the potential to make a significant impact in the broader crypto space. I can clearly see it emerging as the next big breakthrough in the ever-evolving landscape of Web3 technologies.
Resources
Want to learn more about Chronicle? You can refer to the links below: