RedStone - The Modular Oracles
A blockchain oracle is a service or a protocol that bridges the gap between the blockchain and the external world by bringing off-chain data onto the blockchain. This capability allows smart contracts to interact with real-world data and build applications based on real-time data. Oracles enable various popular use cases, including trading protocols that rely on price feeds, prediction markets that depend on real-world events, sports betting applications that need ongoing scores and game results and many more. By utilizing multiple sources for data, oracles ensure that the information remains decentralized and resistant to manipulation by a single source, maintaining the integrity and reliability of the data they provide.
Chainlink and Pyth are among the most popular oracle protocols, supplying the majority of data to smart contracts across various blockchain networks. Chainlink, the current market leader, is widely adopted and supports a diverse range of datasets by integrating with numerous real-world APIs and datasets. In contrast, Pyth focuses primarily on financial data feeds, collaborating with financial institutions to provide high-quality data. Key attributes of a good oracle include the reliability and verifiability of data feeds, decentralization to prevent reliance on a single entity and avoid single points of failure, cross-chain compatibility, and resistance to data manipulation.
Introducing RedStone - The Modular Oracles
RedStone is the fastest-growing modular oracle, known for its gas-optimized and secure price feeds that cater to all Ethereum Virtual Machines (EVMs) and Rollup-as-a-Service (RaaS) networks. Its unique modular design allows it to provide cross-chain compatibility, making it available not only on EVMs but also on non-EVMs, rollups, and various appchains including TON, Starknet, Fuel Network, Casper and more. RedStone is particularly adept at providing price feeds for unique assets, such as liquid staking tokens (LSTs) and liquid re-staking tokens (LRTs), tailored to meet market trends and specific developer needs. RedStone offers multiple data consumption models, ensuring flexibility and adaptability for various use cases with its independent and robust modules. It broadcasts signed data packages to the Data Distribution Layer (DDL) and archives them on Arweave, allowing consumers to utilize data feeds in Pull, Push, and X models. As of this writing, RedStone secures $3.8 billion in assets across more than 60 chains. It supports approximately 1,200 assets, with data originating from nearly 200 different sources.
Unique Selling Points of RedStone
In a market that is dominated by the incumbents such as Chainlink, and Pyth, RedStone aims to establish its space through it’s following Unique features
Modular Architecture
Data Sourcing Module: RedStone sources data from multiple on-chain, off-chain, and various aggregator sources. This modular approach allows the system to add and remove different data sources as necessary, ensuring that it does not rely on a single source. This decentralization of data sourcing enhances the reliability and security of the information provided.
Data Providers Module: Independent nodes operated by data providers aggregate the data using various methodologies such as median, Time-Weighted Average Price (TWAP), and Last-Weighted Average Price (LWAP). Safety measures like outlier detection are employed to ensure data accuracy. The cleaned and processed data is then signed by node operators, making the data aggregation process decentralized and trustworthy.
Data Distribution Layer (DDL) Module: The aggregated data is made available on the Data Distribution Layer (DDL), which broadcasts the data to consumers and pushes it to Arweave nodes for long-term storage and consumption by smart contracts. This ensures that data remains accessible and secure for future use.
Integration Models: Applications can integrate with RedStone in three different models:
RedStone Core (Pull): The smart contract pulls the data during transaction execution, achieving maximum gas efficiency and maintaining an excellent user experience, as the entire process is completed within a single transaction.
RedStone Classic (Push): Data is pushed into on-chain storage via a relayer. This model is dedicated to protocols designed for the traditional Oracle model, allowing full control over the data source and update conditions.
RedStone X (Perps): Targeting the needs of advanced protocols such as perpetuals, options, and derivatives, this model eliminates front-running risk by providing price feeds at the very next block after users' interactions.
This modular design ensures that RedStone remains flexible, reliable, and capable of meeting the diverse needs of various blockchain applications. Additionally, the team can incorporate the latest technologies into specific modules without requiring upgrades to others. For example, they can utilize Actively Validated Service on top of EigenLayer for data aggregation.
Dedicated Price Methodologies
RedStone's modular approach allows it to employ dedicated pricing methodologies tailored to different classes of assets, such as traditional assets and yield-bearing assets. For example, when pricing yield-bearing assets, RedStone utilizes a slippage-based approach instead of the Volume Weighted Average Price (VWAP) method, resulting in more accurate pricing.
This accuracy is further enhanced by the diversification of data sources and the use of median aggregation. By pulling data from multiple sources and applying a median aggregation technique, RedStone ensures that no single outlier can skew the overall price feed. This method provides a robust and reliable pricing mechanism, which is essential for maintaining the integrity and trustworthiness of the data used by smart contracts and decentralized applications (dapps).
Flexible Data-Delivery
RedStone offers both push and pull models for data delivery, providing flexibility to meet various use case requirements.
Push Model: In the push model, data is pushed to the blockchain either at regular intervals or when the price changes beyond a defined threshold. This method incurs consistent gas costs and contributes to regular on-chain traffic and data updates. However, as the number of price feeds increases, this model can become a bottleneck due to the continuous and potentially high gas costs.
Pull Model: The pull model allows data consumers to pull the data when they actually need it, significantly saving on gas costs. In this model, the gas cost is transferred to the consumer of the oracle data, such as the smart contract or the end user. This approach is especially cost-efficient for assets with low trade volumes, where frequent updates are unnecessary. RedStone stores live data on the Data Distribution Layer, making it available for the app to access when the smart contract pulls the data.
While both methods have their specific use cases, RedStone uniquely supports both the push and pull data models. This dual support enhances flexibility, allowing users to choose the model that best fits their needs and optimizing cost-efficiency and performance for a wide range of applications.
Technical Architecture
Above is the data flow diagram for RedStone oracle. While a complete deep dive into RedStone's technical architecture is beyond the scope of this article, three salient features stand out:
Highly Modular Design: RedStone's architecture is highly modular, allowing various modules to be optimized or replaced in the future without affecting the rest of the system. This modularity also facilitates easy customization, enabling future customization for specific use cases without major overhauls.
Decentralization: Most elements in RedStone's design are decentralized, making it a really strong choice for many dapps. This approach eliminates single points of failure, enhances security, and ensures that control is distributed across the network. By decentralizing data sources and aggregation, RedStone maintains the integrity and trustworthiness of the information provided to its users.
Data Verification and Signing: Individual nodes verify and sign the data, ensuring its reliability and integrity.
Use Cases and Applications
Currently RedStone is primarily focused on providing price feeds for the DeFi use cases such as
Lending Markets
CDP Stablecoins
Algorithmic Stablecoins
Leverage Protocols
Derivative Protocols
Yield Protocols
However, RedStone’s modular design allows it to expand into other verticals as market needs evolve. The team is also exploring institutional Oracle implementations, which will become increasingly important for the expansion of web3.
Summary
RedStone is on a mission to challenge incumbents like Chainlink and Pyth with its unique modular approach, offering flexibility and custom solutions for a wide range of use cases. With availability across more than 60 chains and integrations with over 70 applications, RedStone secures a significant total value locked (TVL), providing a strong foundation for its growth. Although RedStone has initially focused on DeFi use cases, its versatile architecture positions it well to address a variety of other use cases as the market continues to evolve. By leveraging its highly modular design, decentralized architecture, and robust data verification processes, RedStone is poised to become a key player in the blockchain oracle space.