Snorkel: A New Vision for DeFi Oracle Systems
At this year's Polkadot Decoded, we unveiled Snorkel, an innovative, trustless oracle solution built utilizing t3rn’s novel technology. Today, we're taking a closer look at its architecture and the innovations that make it unique and valuable.
The Challenge: Background on Blockchain and Oracles
Before diving into Snorkel's architecture, it's crucial to understand the challenges it aims to solve. Blockchains and cryptocurrencies have limitations, and oracles, while useful, introduce their own set of challenges. Snorkel is designed to address these issues by offering a secure, reliable, and transparent solution for price feed data as well as the transaction costs.
The Solution: Snorkel Architecture
Now, let's explore how Snorkel tackles these challenges through its unique architecture.
- t3rn Protocol: The t3rn protocol serves as the foundation of Snorkel. Deployed as a Polkadot parachain, it enables seamless data aggregation and validation, while leveraging the security of the Polkadot relaychain and consensus umbrella.
- Light Client Validator: The next piece of the puzzle is the Light Client Validator. This component verifies the authenticity and integrity of the data collected, processing block headers and merkle proofs. It ensures data is derived from legitimate sources and remains untampered. Shifting data validation to the on-chain Light Client Validator on t3rn, we’re able to significantly reduce the cost of overall data processing involved in Snorkel.
- Data Aggregator: Responsible for real-time monitoring of liquidity pools across DEXs, it collects, processes, and standardizes price feed data, reducing the risk of manipulation.
- Data Anchor: Ensuring data immutability is the Data Anchor, this component anchors the validated data on-chain using merkle proofs, ensuring immutability and tamper-resistance.
- Data Dissemination: Last but not least, the Data Dissemination component ensures that this high-quality data reaches its final destination. It distributes the verified and anchored data to DeFi applications, ensuring data availability and reliability.
How Snorkel Stands Out
Snorkel is not your typical protocol, it distinguishes itself through several key innovations. One such notable improvement is the approach to decentralized data aggregation. This approach removes the need for dependence on single data sources, thereby mitigating the risks associated with centralization and data manipulation, such as bad data and exploits.
Another significant innovation lies in Snorkel's utilization of light client technology for data validation. This enables Snorkel to achieve resource efficiency and scalability.
Furthermore, Snorkel enhances security and trust through an on-chain data anchoring mechanism, this additional layer of security bolsters the reliability of price data. Together, these innovations position Snorkel as a potentially useful solution in the space, offering a decentralized approach to data aggregation, efficient data validation and improved security for price data. This, in turn, underpins its relevance in practical applications that address real-world needs in the DeFi space. Some specific examples of its practical use cases in the DeFi ecosystem are:
- Decentralized Lending Platforms: Snorkel provides accurate asset prices, crucial for core pillars of Defi, such as determining collateralization levels.
- Decentralized Derivatives: Snorkel enables the creation of financial instruments based on accurate asset prices.
- Automated Market Makers (AMMs): Snorkel can help AMMs manage liquidity pools effectively.
- On-chain transaction cost estimation: On top of the price feeds for asset pairs, Snorkel provides the gas cost information, based on randomly sampled (Fibonacci numbers) transaction proofs. This comes handy to e.g. smart contracts looking to repatriate gas fees to their users.
Data Integrity and Security
Snorkel enhances data trustworthiness by implementing independent light client protocols to verify data authenticity. This approach adds an extra layer of assurance to data integrity. Additionally, Snorkel's use of light clients improves resource efficiency and scalability, reducing the load on oracles and ensuring smoother, more scalable operations.
With all that said, it is essential to acknowledge the limitations of light clients. While they offer undeniable benefits, they can be less secure than full nodes and can be vulnerable to very specific types of attacks. These considerations underscore the importance of a balanced assessment of Snorkel's capabilities and potential challenges.
Looking Ahead: Conclusion
In summary, Snorkel presents a comprehensive solution for secure and reliable price feed data aggregation and validation. By leveraging t3rn’s light client protocols, it offers answers to some key challenges in the DeFi ecosystem, paving the way for the next generation of applications and services. For those interested in learning more, follow our social media profiles to stay updated on our latest developments.
t3rn is a multichain protocol that brings fail-safe, interoperable execution and smart contract composability to the Polkadot ecosystem and beyond. t3rn’s ultimate goal is to enable trust-free collaboration between blockchains and to create an ecosystem in which anyone can utilize and deploy an interoperable smart contract, in an ecosystem where developers are fairly rewarded for their contributions.
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