Encryption and Scalability
As we draw nearer to the completion of the mainnet, we are deciding in what order to integrate the first few chains into the ORAO network. The overwhelming majority of the code carries over between networks, so there will be a rapid succession of releases once the mainnet goes live, but even so we thought we would walk the community through the reasons we prioritize certain ecosystems over others.
The Importance of Scaling
If you are publishing a free price feed for anyone to use, you can just print it as is, in plain text. This is reasonably cheap on any chain, and even doable on Bitcoin if you wanted to (Though of course, there are no smart contracts on BTC to take advantage of the data). However, in a data marketplace with more sophisticated data products, there’s a choice to be made, with significant tradeoffs. A data provider has to decide whether to publish their product encrypted or unencrypted.
If encrypted they provide a key to the buyer upon subscription, and the data feed will be concealed from anyone without the key. Encryption, however, greatly bloats the size of the transactions involved, as it will require data buyers to unencrypt the data to be able to read and make use of it. Accessing an encrypted pricefeed on Ethereum right now can easily cost over $100 in gas.
This is the most secure and private way of doing it. The alternative is to not encrypt data, in which case a provider may be able to sell their data product once, but after that, as it’s stored in plain text on the chain, the data is available for anyone to use for free. And this makes it a lot more difficult to operate a sustainable business model selling data.
Current oracle platforms, in order to attract buyers and sellers, have so far focused almost entirely on Ethereum, because that’s where the DeFi revolution started. However, because of the congestion and high fees on Ethereum, this means all their data products have to be unencrypted, unless buyers are willing to pay over $100 in just fees, every single time they want to access data. In order to make this business model work at all there are typically incentives for data providers in the form of tokens, but the amount of tokens given out to make up for gas fees is entirely unsustainable.
Setting the Stage for a Sustainable Market
With ORAO we decided that economics have to win out. To be sure we have our own token incentives; validator rewards and pure staking. But we aim to create a data marketplace that can be self sustaining within the foreseeable future. For that reason, data products on ORAO will be encrypted. They also cannot cost $100 to access. Putting these together, Ethereum layer 1 does not work in its current state. We may do one or two promotional, unencrypted data feeds there, but for the actual data market… no. We will instead be focusing on our partner chains, and on other ecosystems that can actually sustain the network.
In the first stages of the mainnet, then, we will be launching on chains such as Solana, Elrond, the Binance Smart Chain, and Ethereum layer 2s. We are looking forward to exciting times ahead, and we hope that you will be with us.