42. Top 10 blockchain oracles. How do they work? How do they differ?

Blockchain technology is powerful. It allows us to build decentralized apps, execute smart contracts without middlemen, and create transparent financial systems. But even the most advanced blockchains have a major limitation — they can’t access real-world data on their own.

That’s where blockchain oracles come in. These tools are the bridge between blockchain systems and the outside world, helping smart contracts make decisions based on real-life events.

What Are Blockchain Oracles?

Imagine a smart contract that needs to release funds when a flight is delayed, or when ETH hits a certain price. The blockchain itself doesn’t know if the flight was late or what the current ETH price is.

Blockchain oracles solve this problem. They feed off-chain data — like prices, weather updates, GPS locations, or sports results — into blockchain applications. Without oracles, smart contracts would be stuck in their own isolated world.

With oracles, they can:

• trigger automatic payments,

• adjust values in DeFi apps,

• settle bets in prediction markets,

• track assets in supply chains,

• and much more.

Where Do Oracles Get Their Data?

Oracles gather data from various sources, depending on what’s needed:

• APIs from exchanges like Binance or Coinbase,

• IoT devices, like temperature sensors or QR scanners,

• Human input, for example from experts like meteorologists,

• Or aggregated feeds from multiple sources to boost reliability.

Most oracles rely on multiple nodes (computers) to verify the data before it’s sent to the blockchain. This reduces the chance of errors or manipulation.

Types of Oracles

Not all oracles work the same way. Here are the main types:

• Inbound oracles – send information into the blockchain (like price feeds).

• Outbound oracles – send blockchain data out to the real world (like triggering a bank payment).

• Hardware oracles – gather data from physical devices.

• Software oracles – get information from web-based sources.

• Decentralized oracles – use multiple nodes to verify data, avoiding a single point of failure.

• Centralized oracles – rely on one trusted source (faster but riskier).

• Human oracles – real people input data manually.

• Contract-specific oracles – created for a single task and shut down afterward.

Top 10 Blockchain Oracles – Updated as of May 8, 2025

1. Chainlink (LINK)
   The market leader in blockchain oracles. Supports multiple networks (Ethereum, BNB Chain, Avalanche). Offers the Cross-Chain Interoperability Protocol (CCIP) for blockchain-to-blockchain communication.
   Price: $13.55

2. Band Protocol (BAND)
   Oracle operating in the Cosmos ecosystem. Uses a Delegated Proof of Stake (DPoS) mechanism for manipulation resistance.
   Price: $0.77

3. UMA (UMA)
   Specializes in synthetic assets and financial contracts on Ethereum. Its oracles are often used in prediction markets and options.
   Price: $2.02

4. DIA (DIA)
   An open-source project aggregating data from centralized and decentralized exchanges. Allows creation of custom data feeds.
   Price: $0.54

5. API3 (API3)
   Provides decentralized APIs (dAPIs) without intermediaries. Known for its Airnode solution, which simplifies data integration with blockchains.
   Price: $1.14

6. XYO Network (XYO)
   Focused on geospatial data. Uses decentralized devices to verify the location of users and objects.
   Price: $0.0054

7. iExec RLC (RLC)
   Offers off-chain computing power. Functions like a decentralized version of cloud services such as AWS.
   Price: $1.21

8. Tellor (TRB)
   Built on Ethereum. Data is supplied by reporters and accessed by users who pay in TRB tokens.
   Price: $91.74

9. Nest Protocol (NEST)
   Runs on Ethereum and uses a quotation mining mechanism to deliver accurate and transparent price feeds.
   Price: $0.0011

10. DOS Network
    A layer 2 oracle known for speed and scalability. Supports multiple blockchain networks and efficiently processes off-chain data.
    Price: Unavailable (low liquidity and limited exchange presence)

Why Are Oracles So Important?

Without oracles, smart contracts would be blind. Oracles give them the ability to react to real-world events, enabling:

• DeFi apps to update prices in real time,

• NFT games to sync in-game rewards with off-chain events,

• DAOs to vote based on real-world outcomes,

• and logistics apps to track real items.

In short, oracles unlock the full potential of blockchain technology.