Oracles gained significant traction in the last cycle, propelled by the rise of DeFi and their crucial role as middleware. Today, Chainlink firmly holds the market leader position, while Pyth is expanding rapidly within the Solana ecosystem and DeFi protocols. As modular design protocols sweep across various domains like public chains and restaking, where does modular design stand in the oracle space?
Introducing RedStone, a modular oracle protocol. In early July, RedStone completed a $15 million Series A funding round, led by Arrington Capital, with participation from Kraken Ventures, White Star Capital, Spartan Group, Amber Group, SevenX Ventures, IOSG Ventures, Berachain’s Smokey the Bera and Homme Bera, Ether.Fi’s Mike Silagadze, Jozef Vogel and Rok Kopp, and angel investors from Puffer Finance including Amir Forouzani, Jason Vranek, and Christina Chen.
What is RedStone?
RedStone is a modular oracle network that provides data sources for DApps and smart contracts on L1, L2, and Rollup-as-a-Service networks like EigenLayer, particularly benefiting yield collateral in lending markets, such as LSTs and LRTs.
Today’s oracle networks are not without flaws; issues remain with the accuracy and completeness of data sources. Additionally, when new assets are listed more frequently and rapidly, some oracles lag in response, or fail to support new assets altogether.
RedStone adopts a differentiated modular design to meet the needs of DeFi protocols. Data providers can avoid continuously delivering on-chain data and allow end-users to deliver signed oracle data on-chain themselves. RedStone also utilizes Arweave to archive and maintain oracle data.
According to official data, since launching on the mainnet in January 2023, RedStone has supported over 20 chains and integrated more than 1,000 asset sources from 50 data providers. These asset sources include not only cryptocurrencies but also stocks, fiat currencies, commodities, and ETFs.
How RedStone Works?
Most oracles in the market use a third-party push model. Chainlink, a well-known oracle protocol, uses a pull model, while Pyth uses a push model, both aimed at addressing trust and cost issues.
Specifically, Chainlink’s primary price source oracle nodes obtain data from secondary sources. Oracles pull price updates to individual chains at set intervals, incurring gas fees for each on-chain update. Adding price sources or reducing on-chain update delays increases costs, hindering scalability. In Pyth’s push model, data is directly provided by exchanges, market makers, and DeFi protocols (such as Jane Street, Binance, and Raydium). These entities are incentivized to act honestly and provide robust data to maintain a good reputation and avoid protocol bans.
RedStone uses a modular design, employing three different models based on business needs and inter-chain architecture, maximizing the advantages and avoiding the drawbacks of each model:
- Pull Model: Dynamically loads data into user transactions, saving gas and optimizing user experience, suitable for individual transactions.
- Push Model: Transmits data to the chain for storage via relayers, primarily for legacy oracle protocols.
- X Model: Focuses on perpetual contracts, options, and derivatives by eliminating frontrunning risks.
A typical workflow involves collecting data from sources like exchanges (Binance, Coinbase, and Kraken), on-chain DEXs (Uniswap, Balancer), and market data aggregators (CoinMarketCap, CoinGecko).
Data is aggregated by independent nodes operated by data providers, using various methods like median, Time-Weighted Average Price (TWAP), Linear Weighted Average Price (LWAP), and outlier detection to ensure data quality.
These data streams are broadcast directly to open-source gateways that can be easily decoupled on-demand. Data can be pushed to the chain under predefined conditions via dedicated relayers or by robots (e.g., liquidation bots) and end-users interacting with the protocol.
RedStone initially stores data in the DA layer before extracting it to the chain. This allows for broadcasting large volumes of assets at high frequencies to cheaper layers, only placing data on-chain when needed by protocols.
RedStone has not yet launched a token but has outlined its potential uses in its official documentation, including paying for data access fees, staking tokens within the ecosystem to penalize malicious actors, voting to resolve disputes, and early market development. The team also plans to allocate token grants and subsidies to early data adopters and providers.
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