Binance Launches "reliable and secure" Oracle Network

Bridges between the blockchain and the real world are key to Web3.

Binance has launched the Oracle Network for its BNB Chain ecosystem, connecting the blockchain with real-world data and vice versa. At the same time, the “early birds program” was launched, in which 10 BNB projects take part.

According to DeFi Llama, the projects that have already integrated Binance Oracle include some of the biggest teams on the BNB network: Venus Lending Protocol ($770M Total Value Locked, or TVL), yield farming platform Alpaca Finance ($510M TVL), and liquid Staking solution Ankr ($101M TVL).

Oracles allow smart contracts to access data that exists outside of the blockchain. For example, a protocol may require its smart contract to be triggered based on security prices, macroeconomic indicators, or even weather data.

“Using oracles to significantly increase the smart contract’s knowledge of what’s going on outside the blockchain, allowing it to react to external events with specific actions, will be critical,” Gwendolyn Regina, investment director at BNB Chain, said in a statement.

Initially, Binance Oracle will provide index prices for the most popular digital assets.

The message also noted security: intelligent algorithms will check prices for accuracy and consistency, and a data monitoring architecture has been created. Binance stated that the network's recovery time, or its tolerance for downtime, is "nearly zero".

Each data feed will be tracked using a widely used “threshold signature scheme” and verified using Binance’s public encryption key to ensure that the data does not change, the company explained.

Despite being a key part of the blockchain ecosystem, oracles have recently been used for crypto hacks.

After an attacker stole $100 million from the Mango Markets Solana DeFi trading platform, FTX CEO Sam Benkman-Fried blamed the oracle design for providing the price of the MNGO token on Twitter.

The attacker was able to take out a $100 million loan after raising the price of the MNGO token and giving the erroneous impression that he had more collateral than he actually did.

"The oracle accurately predicted MNGO's current pride," Benkman-Fried tweeted. "It's just that the 'current price' wasn't really close to the 'fair price'."

More recently, an attacker exploited a vulnerability in Curve Finance's price oracle and carried out a $220,000 worth of flash loans attack on the decentralized exchange (DEX) QuickSwap. Following this attack, Polygon DEX shut down its lending protocol.