The Oracle Problem, a fundamental limitation and grand challenge in decentralized networks and blockchain projects, can be tackled by proposing a generic formal DeOracles (trustless oracles in decentralized networks) framework. In this article, we focus specifically on DePIN and design a mechanism to collectively produce trustless time-stamped messages, which are safe for an external environment-free entity to utilize in smart contracts. This jointly established physical value on a blockchain and its characteristics would be transparent and open for inspection by entities who want to incorporate such data, often in the form of automated computational agents in a decentralized network.
Our aim is to lay out a formal framework for future work on the DeOracle (trustless oracles operating in a decentralized physical network) and Enabler-of-DecOracles (EoD, general formulation, and some specific categories). The operation of at least one such device has a positive externality of generating an end-of-the-chain physical (EoCP) on the blockchain, which is our formalization of a general involvement of an entity or agent outside the MAC-layer mesh network.
Society’s current increasing reliance on blockchain technology has shown the need for decentralized networks to interact in a seamless and efficient manner, in order for conventional services to manage the integration needed to join the rapidly evolving economy. The Oracle problem, which had hindered the ability of blockchain networks to interact off-chain, is now showing a high demand for oracle implementations. The oracle problem arises from the fact that by nature, real-world data (e.g., prices, weather, etc.) cannot be translated into purely digital data and trustlessly stored on the blockchain, jeopardizing the independently verifiable and determinable truth that defines blockchain technology. Whilst decentralized Oracles like Chainlink and oracles supplied by bridges to centralized services (e.g. IOTA’s oracles and BANDCHAIN) exist, due to the range of trust and inefficiencies they require, there is a need for trustless blockchain implementations.
The exploration of the oracle in physical decentralized networks (DePIN) is a new avenue for research, with the area of decentralized oracles almost exclusively focused on either SysOps and DevOps in terms of blockchain security risks and attack vectors and anonymity and identity management. It is our goal to explore the feasibility of emerging developments in IoT trustless oracles over the past few years, with the apparatus of DePIN, in order to either establish trustless oracles for the purposes of IoT supply chains, smart grids, or even just smart cities etc., or determine what kind of technical challenges await in order to enable trustless oracle functionality in such a diverse area of large devices.
Oracles in Blockchain Technology
An oracle was initially introduced by Turing in 1939 in the form of a human oracle who could answer questions posed by a mechanical machine in the halting problem. In 1994, Nickel extended the definition of an oracle as a logical grounding with correct answers in deductive databases. The term oracle is similarly used in the context of smart contracts and blockchain technology to refer to trusted data feeds on predefined conditions to act as a watchman. A smart contract is a self-executing contract with the terms of the workflow directly written into code and deployed on a decentralized system. An event-triggered smart contract needs to be first fed with off-chain events to be automatically executed. An oracle provides these off-chain events by monitoring the outside world.
Oracles can solve a number of issues in blockchain, such as enabling, creating, and processing bets and derivatives, and enforcing contract terms. Although it is similar to the role of middlemen, it is not the same since an oracle takes raw information and sends it to a smart contract without degrading the information or having a position in a transaction. Oracles function by using Application Programming Interfaces to publish data to the blockchain, aggregate data from multiple APIs, filter it, and choose the most accurate data to provide to the smart contracts. They also source data from data feeds using immutable forecasts. As mentioned earlier, oracles are used to offer an external trigger of state in a decentralized network, particularly in the domain of De-Fi. The oracle pool should meet certain qualifications to provide fair, timely, and accurate information. A trustless oracle is a recent research study that is finding ways to ensure valid data by relying on verifiers of data. The next subsection discusses the requirements for such oracles in detail within the context of a decentralized network.
Oracles are a well-known concept within the blockchain context, which provide an answer to the question of how smart contracts, behaving deterministically during execution, can use real-world and off-chain data as part of their functionalities. Oracles provide access to external data feeds or services and deploy information sufficiently credible to be considered adoption-worthy. The term “sufficiently credible” is included in the definition because of an agency problem when defining the ‘trustfulness’ of oracles for the “consensus” oracles part. A normal requirement for consensus is some users validating the result of the computations. However, in a trustless model, validating the result of the computations can only be done after the execution of a computational task is finished. In addition, an assessor does not have access to the original data because it is encrypted. Thus, there are no reasons for an assessor to trust a computation model or a consensus oracle since the original data and its manipulation are transparent.
Trustless Oracles
The role of trustless oracles as intermediaries between the off-chain world and blockchain-powered decentralized applications is becoming significantly important for modern blockchains and their use-cases. Oracles have been put forward as a preliminary solution to allow access to real-world information in a tamper-proof and transparent way. A trustless oracle should be designed to ensure that any honest user can receive the same responses from a centralized oracle. Furthermore, a trustless oracle can be described as a system that can be trusted not to work in favor of a single party instead of in favor of a group of parties. Therefore, messages cannot be forged, and attempting to re-route transactions cannot be undetected. In other words, in a trustless oracle, tamper resistance and resilience are both enforced, thus ‘Cut-and-Choose’ validation is supported.
Hackers are responsible for much serious loss that occurs in blockchain ecosystems. Therefore, external providers of necessary data (oracles) are at the pit and core of blockchain technology. Accordingly, trustless oracles are critical for ensuring tamper-proof communication. This paper harnesses a twin transformative framework that utilizes the twin concepts of “trustless” and “oracles” in a multidisciplinary approach that combines ‘proof of concept’ applications of functional trustless blockchain-powered DPORs with sound theoretical computer science to result in a new and necessary concept of decentralized physical networks (DPNs). Combined, these reveal the significance and role of trustless oracles through relevant case studies using the DePIN technical details to analyze how trustless oracles play a crucial role in interconnected, decentralized physical systems while referencing theory used with DPNs within the initial contributions section. Thus, “trustless oracles” is a new concept that is motivated and explicated within this chapter as posing demonstrable technological significance.
Physical, decentralized blockchain networks are securing the future of global operating and transactional systems. Essential contracts and their integration into decentralized finance create new ecosystems for broad user bases, allowing peers involved in such exchanges to perform verification of any off-chain credentials or assurances and requiring systems to be trustless. In the absence of trusted verifying services, the consensus-based verification system posed by oracles seems a crucial capability. This capability is also outlined in the envisaged proof-of-concept supporting input regarding trustless system outputs. We therefore regard oracles as pivotal enablers of trustless behavior by enforcing an internal resolution mechanism in support of fraud detection and prevention that raises operational security significantly.
Trustless oracles in decentralized physical networks are not a novel proposal in a distributed context. The access-based oracle protocol, conceived by Conway et al., enables Pipes and Cistern scheduling without revealing secret, machine-specific processing capacity. A similar concept paved the road to privacy-preserving oracles, ensuring the privacy between oracles and parties by separating the private transaction details from these oracles. These protocols, however, are operating in a semi-trusted domain. Trustless systems are a driving idea for blockchain, meaning “most of” in a trustless environment. While such models increase attack exponents and have little impact on processing growth, they pose severe challenges for both veracity support and the design and orchestration of data by a blockchain. Given their importance for nodes and users alike, we develop a trustless oracle model that emphasizes peer-reviewed secure processing and legitimation.
Trustless oracles should always adhere to a set of design principles that prioritize usability, ease of implementation, and access to real-world data. As a result, they are designed to function as stateless services providing the consumer of their data an easy-to-implement interface to retrieve observations of the physical world.
As the design of trustless oracles is explicitly designed to reduce technical as well as cognitive complexity, ease of implementation and reliability are prioritized, with blockchain-mirroring functionality introduced as a mere extension. Trustless oracles can technically be operated and utilized entirely to decentralize physical networks, without coupling to blockchain services like decentralized finance or identity management, adding the functionality at the will of the architectural deployer, such as a city administration or civic tech provider.
In general, applications extracting and using environmental sensor networks and other physical information can combine many instances to cross-validate measurements. If each node and data source always generate a correlation/UID string and provide this together with the plain sign-of-life message at regular intervals, it remains harder to spoof accurate on-chain data. Like biological systems, trustless oracles strive to be simple, decentralized, non-profit, and open-access to the extent possible. The chaining structure shows and proves the logical evolution of field values to prevent state manipulation, and the designs of the plain mirroring tools are based on HTTP for ease of global adoption.
Statistically, data from PoP sources verifiable in this manner can be trusted as authentic real-world observations, even if it is not known by whom they were authored or which device has transmitted them to be recorded.
