The decentralized Layer-2 oracle solution Umbrella Network has officially launched on Ethereum Mainnet. On Friday, the company announced this on its blog.
The community-owned Umbrella Network is a Layer-2 oracle network that batches data to provide low-cost, scalable, and secure data. It makes use of advances in Merkle tree technology to write multiple data points on a single on-chain transaction, improving the accuracy and cost-effectiveness of batching data to smart contracts. A community-owned oracle, according to Umbrella Network, is critical to the creation of a truly decentralized financial system.
The Meaning of Blockchain Oracles
Cryptocurrencies are used to transfer value and enable the protocol’s operations in most blockchains. Smart contracts are also supported by some blockchains.
A smart contract, according to Wikipedia, is a computer program or transaction protocol designed to automatically execute, control, or document legally relevant events and actions in accordance with the terms of a contract or agreement. The reduction of the need for trusted intermediaries, arbitrations, and enforcement costs, as well as fraud losses and malicious and accidental exceptions, are all goals of smart contracts.
However, in order for smart contracts to have any real-world applications, blockchains and on-chain smart contracts must be able to use external, off-chain data.
Ethereum.org defines an oracle, the oracle problem, and how decentralized oracles solve the problem. “An oracle is a link that connects the blockchain to the real world. They function as on-chain APIs that you can use to get data for your smart contracts. This could include anything from price data to weather forecasts. Oracles can also be bi-directional, allowing data to be “sent” out into the real world.”
Off-chain data cannot be accessed directly by blockchain transactions (e.g. Ethereum). Simultaneously, relying on a single source of truth to provide data is insecure and invalidates a smart contract’s decentralization. The oracle problem is what it’s called.
This oracle problem can be avoided by using a decentralized oracle that pulls data from multiple sources; even if one of the data sources is hacked or fails, the smart contract will continue to work as intended.
Umbrella Network claims that its decentralized network outperforms the competition. It offers feeds that are relatively quick and inexpensive. It also claims to make more data pairs available than any other oracle in the ecosystem (currently 1,200 data pairs, growing to over 10,000 by the end of 2021).
As smart contract technology becomes more mainstream, the demand for reliable data feeds appears to be increasing. Brazil’s main stock exchange, for example, is looking into ways to supply data to the country’s central bank digital currency (CBDC) project.
On Ethereum, the Umbrella Network has launched its mainnet.
The launch of Umbrella Network’s mainnet on Ethereum signifies the deployment of Smart contracts on the Ethereum Blockchain. This means Ethereum-based dApps can interact with Umbrella Network code in the real world, requesting and receiving data that is both reliable and cost-effective.
“We are absolutely thrilled to be able to achieve this important milestone,” founding partner Sam Kim said of the mainnet launch. With our decentralized oracles, we will be able to serve the needs of the largest DeFi community, and we will look to address real challenges the community faces today, such as the high cost and low availability of data offerings in the ecosystem.”
In recent months, the company has been busy with acquisitions and new products. The network went live on the Binance Smart Chain (BSC) mainnet in May. In the coming months, the Umbrella network will also announce plans for future cross-chain integration with Polygon, Solana, Cardano, and Avalanche. In the same breath, it announced the upcoming launch of its Token Bridge, which was developed in-house. This allows for seamless $UMB transfers across all supported Blockchains.