Over the past two years, hackers have attacked DeFi protocols several times using instant loans, exploiting vulnerabilities in price oracles and spoofing data.
Project Witnet is working to create a decentralized oracle network that will protect the blockchain ecosystem from such hacks. It ensures the delivery of reliable data from external sources to the smart contracts of Ethereum and other blockchains. We talk about the operation of the Witnet protocol, its ecosystem and the WIT token.
What are oracles and how smart contracts are hacked with them
A smart contract is a computer algorithm that implements the logic of a certain agreement between blockchain users without the participation of intermediaries.
Decentralized exchanges, landing services and other DeFi protocols often use data from sources outside the blockchain. They can be the average rate of bitcoin on centralized exchanges, the price of gold on the stock market, or balances of addresses in other networks. Contracts cannot obtain this data on their own and request it from oracles.
Oracles are applications that, at the request of smart contracts, read the necessary information and broadcast it to the blockchain. The honesty of the application and the safety of user funds depend on the reliability of the data.
Malefactors can interfere with work of an oracle to replace the transferred information and to create opportunities for financial frauds. For example, in November 2020, hackers attacked the Cheese Bank DeFi project by exploiting a vulnerability in Uniswap’s oracle cost estimation mechanisms. As a result, the attackers withdrew $3.3 million in USDC, USDT and DAI stablecoins.
Oracle developers secure data with cryptographic signatures, honesty checks, and value averaging. The Witnet team solved the problem of information security in their own way: they singled out oracles into a decentralized network with a consensus algorithm and rewards for oracle owners.
How the Witnet protocol works
In 2017, Adam Sanchez de Pedro, CTO of the blockchain startup Stampery, Daniele Levy, the CEO, and Luis Ivan Cuende, the lead developer of the Aragon blockchain project, published a white paper Witnet: A Decentralized Oracle Network Protocol.
“Smart contracts cannot become truly economically decentralized until we create a decentralized oracle that relies not on blind trust, but on some digital analogue of the wisdom of the crowd,” the authors of the document say.
White paper describes a protocol with a network of nodes (witnesses, witnesses). They connect Ethereum smart contracts to external data sources such as stock exchanges, sports websites, weather aggregators or blockchain explorers.
The reliability of the transmitted information is checked by the nodes themselves. They are rewarded for this in the form of native Witnet tokens (WIT). Due to the economic incentive, node owners are interested in transmitting truthful information.
The Witnet protocol implements a variation of the Byzantine Fault Tolerance (BFT) consensus algorithm using Proof-of-Eligibility (PoE). The BFT algorithm allows consensus to be reached even if ⅓ of the nodes in the network do not respond or give incorrect information.
Only a part of the nodes is involved in the process of data transfer at any given time. The network separates user requests into separate tasks, and then selects a subset of nodes to solve it.
To get into the subset, the node first “knows” whether it can complete the task. This eligibility method is called the cryptographic sortition scheme. It can be compared to checking the availability of a winning ticket by lottery participants.
In Witnet, the probability that a node is suitable for the current task depends on reputation. It is formed on the basis of the historical honesty of the node and the quality of the previous tasks.
You can query Witnet for data using:
- domain-specific programming language RAD Object Notation (RADON);
- Witnet Truffle box service, which allows you to write data requests in the Solidity language in Ethereum. Instructions for creating data queries on Solidity published on the Witnet site;
- using a desktop wallet Sheikah.
Users pay for each data request in native Witnet tokens (WIT). The process of receiving, validating and delivering data to smart contracts is called Witnessing.
The simplified data acquisition process looks like this:
- The user publishes a request and specifies what data he needs.
- Active nodes are drawn to complete the task.
- The selected nodes receive data from the specified sources, arrange them into a single result and confirm its veracity.
- The remaining nodes write the result to the current block and add it to the Witnet blockchain.
- The user receives data on the blockchain.
The process of receiving, confirming and delivering data takes place within one epoch with a duration of 90 seconds.
The Witnet Ecosystem: Node, Wallet, and Blockchain Explorer
In 2017, Adam Sanchez de Pedro and Daniele Levy founded the non-profit organization Witnet Foundationwhich oversees the development of the Witnet ecosystem.
The organization is developing Witnet Rust — implementation of the Witnet protocol in the Rust programming language. Witnet-Rust consists of two main components: a node and a wallet.
See the Witnet reference material for a detailed instructions for installing a node on Windows, Linux and macOS.
Each node keeps a history of all transactions on the Witnet blockchain. Developers recommend run Witnet-Rust on a computer with 4 GB of RAM and 100 GB of free disk space. The Witnet team estimates that the size of the blockchain will grow by 75 GB per year.
Daniele Levy founded Other Plane Labs in June 2021 to develop a lightweight desktop Witnet wallet Sheikah. With it, users receive and send WIT tokens, as well as create and execute requests for data such as the price of Bitcoin or Ethereum from one or more sources.
In July 2020, an anonymous developer under the pseudonym Dr. CPU introduced blockchain explorer Witnet Explorer. Its users can track blocks and transactions, as well as view network statistics such as the number of blocks mined and active nodes.
Witnet tokenomics: emission and distribution of tokens
WIT is Witnet’s native token with a total supply of 2.5 billion units. At the time of publication, WIT stands $0.033. The token is used to reward Witnet node owners and pay for network user data requests.
Validators will receive 70% of the total supply of the token. The remaining 30% of WIT was pre-mined in the genesis block of the main network. The project team distributed the premine as follows:
- 250 million (10%) – to the founders and early investors;
- 250 million (10%) – Witnet Foundation;
- 250 million (10%) – to participants presale on Republic, which took place in March 2018.
The block mining time on the Witnet network is 45 seconds. The reward for each block is 250 WIT ($9 at the time of publication). Witnet has a halving: every 3,500,000 blocks (approximately five years), the reward will decrease by 50%.
Until the first halving in 2025, validators will find about 1920 blocks per day. The daily emission will be 480,000 WIT, monthly – 14.6 million WIT, and annual – 175 million WIT.
Project development: grant program, listing on Gate.io and integration with other blockchains
On November 23, 2021, the Witnet Foundation launched a grant program to fund projects: improving the protocol, developing the ecosystem, and expanding the Witnet community. To participate in the program, you need to apply on the page Witnet Grant Program in Notion.
In July 2021, the Witnet ecosystem development team launched WitSwap – a cross-chain bridge for wrapping WIT into ERC-20 standard tokens (eWIT). The bridge made it possible to create liquidity pool for eWit on Uniswap v3. In December, a centralized crypto exchange Gate.io conducted a WIT listing.
In 2021, the Witnet Foundation entered into partnerships with Conflux Network, Boba Network, and Metis, and in January with KuCoin Community Chain and Celo. According to Adam Sanchez de Pedro, in February the project will integrate Polygon and Harmony, and during 2022 Avalanche, Moonbeam, Arbitrum, Optimism, Aurora, Klaytn, BSC, xDAI and Solana.
According to the analytical service Witnet Data Feed, more than 50 Witnet price channels are now deployed on 15 main and test blockchains. In 2022, the developers plan to add 150 price channels that will work in 50 networks. Witnet oracles are used by the following projects:
- TriAngle is the leading lending protocol on the Conflux network. It uses the CFX/USDT price channel from Witnet to calculate the AUSD stablecoin loan secured by CFX.
- Agora Space is a social blockchain platform. Using oracles, Witnet gives smart contracts access to decentralized verification of social media data, such as the number of views on YouTube or the number of followers on Twitter.
- Aragon — a framework for creating decentralized autonomous organizations (DAO). Combined with Witnet oracles, it allows vote for suggestions on management in Discord.
In October 2021, developers built an oracle source of random data (randomness oracle) into the protocol. With it, Witnet users can create NFT collections and randomly assign characteristics to tokens. Ethereum Developers Conference Organizers Lisson used this oracle to release an NFT collection Witty Creatures 2.0 on Opensea.
conclusions
Witnet is a decentralized oracle network that provides DeFi services on Ethereum and other networks with secure access to trusted data.
Since the white paper was published in 2017, the team Witnet created a multi-chain ecosystem, and the number of active nodes as of February 2022 exceeded 5000 units.
This year, the Witnet Foundation plans to integrate 11 networks, as well as fund ecosystem projects under grant program. Oracles have become an important infrastructure component of the DeFi sector, so Witnet has every chance to fill this niche.
Subscribe to the Cryplogger channel at YouTube.
Found a mistake in the text? Select it and press CTRL+ENTER
Over the past two years, hackers have attacked DeFi protocols several times using instant loans, exploiting vulnerabilities in price oracles and spoofing data.
Project Witnet is working to create a decentralized oracle network that will protect the blockchain ecosystem from such hacks. It ensures the delivery of reliable data from external sources to the smart contracts of Ethereum and other blockchains. We talk about the operation of the Witnet protocol, its ecosystem and the WIT token.
What are oracles and how smart contracts are hacked with them
A smart contract is a computer algorithm that implements the logic of a certain agreement between blockchain users without the participation of intermediaries.
Decentralized exchanges, landing services and other DeFi protocols often use data from sources outside the blockchain. They can be the average rate of bitcoin on centralized exchanges, the price of gold on the stock market, or balances of addresses in other networks. Contracts cannot obtain this data on their own and request it from oracles.
Oracles are applications that, at the request of smart contracts, read the necessary information and broadcast it to the blockchain. The honesty of the application and the safety of user funds depend on the reliability of the data.
Malefactors can interfere with work of an oracle to replace the transferred information and to create opportunities for financial frauds. For example, in November 2020, hackers attacked the Cheese Bank DeFi project by exploiting a vulnerability in Uniswap’s oracle cost estimation mechanisms. As a result, the attackers withdrew $3.3 million in USDC, USDT and DAI stablecoins.
Oracle developers secure data with cryptographic signatures, honesty checks, and value averaging. The Witnet team solved the problem of information security in their own way: they singled out oracles into a decentralized network with a consensus algorithm and rewards for oracle owners.
How the Witnet protocol works
In 2017, Adam Sanchez de Pedro, CTO of the blockchain startup Stampery, Daniele Levy, the CEO, and Luis Ivan Cuende, the lead developer of the Aragon blockchain project, published a white paper Witnet: A Decentralized Oracle Network Protocol.
“Smart contracts cannot become truly economically decentralized until we create a decentralized oracle that relies not on blind trust, but on some digital analogue of the wisdom of the crowd,” the authors of the document say.
White paper describes a protocol with a network of nodes (witnesses, witnesses). They connect Ethereum smart contracts to external data sources such as stock exchanges, sports websites, weather aggregators or blockchain explorers.
The reliability of the transmitted information is checked by the nodes themselves. They are rewarded for this in the form of native Witnet tokens (WIT). Due to the economic incentive, node owners are interested in transmitting truthful information.
The Witnet protocol implements a variation of the Byzantine Fault Tolerance (BFT) consensus algorithm using Proof-of-Eligibility (PoE). The BFT algorithm allows consensus to be reached even if ⅓ of the nodes in the network do not respond or give incorrect information.
Only a part of the nodes is involved in the process of data transfer at any given time. The network separates user requests into separate tasks, and then selects a subset of nodes to solve it.
To get into the subset, the node first “knows” whether it can complete the task. This eligibility method is called the cryptographic sortition scheme. It can be compared to checking the availability of a winning ticket by lottery participants.
In Witnet, the probability that a node is suitable for the current task depends on reputation. It is formed on the basis of the historical honesty of the node and the quality of the previous tasks.
You can query Witnet for data using:
- domain-specific programming language RAD Object Notation (RADON);
- Witnet Truffle box service, which allows you to write data requests in the Solidity language in Ethereum. Instructions for creating data queries on Solidity published on the Witnet site;
- using a desktop wallet Sheikah.
Users pay for each data request in native Witnet tokens (WIT). The process of receiving, validating and delivering data to smart contracts is called Witnessing.
The simplified data acquisition process looks like this:
- The user publishes a request and specifies what data he needs.
- Active nodes are drawn to complete the task.
- The selected nodes receive data from the specified sources, arrange them into a single result and confirm its veracity.
- The remaining nodes write the result to the current block and add it to the Witnet blockchain.
- The user receives data on the blockchain.
The process of receiving, confirming and delivering data takes place within one epoch with a duration of 90 seconds.
The Witnet Ecosystem: Node, Wallet, and Blockchain Explorer
In 2017, Adam Sanchez de Pedro and Daniele Levy founded the non-profit organization Witnet Foundationwhich oversees the development of the Witnet ecosystem.
The organization is developing Witnet Rust — implementation of the Witnet protocol in the Rust programming language. Witnet-Rust consists of two main components: a node and a wallet.
See the Witnet reference material for a detailed instructions for installing a node on Windows, Linux and macOS.
Each node keeps a history of all transactions on the Witnet blockchain. Developers recommend run Witnet-Rust on a computer with 4 GB of RAM and 100 GB of free disk space. The Witnet team estimates that the size of the blockchain will grow by 75 GB per year.
Daniele Levy founded Other Plane Labs in June 2021 to develop a lightweight desktop Witnet wallet Sheikah. With it, users receive and send WIT tokens, as well as create and execute requests for data such as the price of Bitcoin or Ethereum from one or more sources.
In July 2020, an anonymous developer under the pseudonym Dr. CPU introduced blockchain explorer Witnet Explorer. Its users can track blocks and transactions, as well as view network statistics such as the number of blocks mined and active nodes.
Witnet tokenomics: emission and distribution of tokens
WIT is Witnet’s native token with a total supply of 2.5 billion units. At the time of publication, WIT stands $0.033. The token is used to reward Witnet node owners and pay for network user data requests.
Validators will receive 70% of the total supply of the token. The remaining 30% of WIT was pre-mined in the genesis block of the main network. The project team distributed the premine as follows:
- 250 million (10%) – to the founders and early investors;
- 250 million (10%) – Witnet Foundation;
- 250 million (10%) – to participants presale on Republic, which took place in March 2018.
The block mining time on the Witnet network is 45 seconds. The reward for each block is 250 WIT ($9 at the time of publication). Witnet has a halving: every 3,500,000 blocks (approximately five years), the reward will decrease by 50%.
Until the first halving in 2025, validators will find about 1920 blocks per day. The daily emission will be 480,000 WIT, monthly – 14.6 million WIT, and annual – 175 million WIT.
Project development: grant program, listing on Gate.io and integration with other blockchains
On November 23, 2021, the Witnet Foundation launched a grant program to fund projects: improving the protocol, developing the ecosystem, and expanding the Witnet community. To participate in the program, you need to apply on the page Witnet Grant Program in Notion.
In July 2021, the Witnet ecosystem development team launched WitSwap – a cross-chain bridge for wrapping WIT into ERC-20 standard tokens (eWIT). The bridge made it possible to create liquidity pool for eWit on Uniswap v3. In December, a centralized crypto exchange Gate.io conducted a WIT listing.
In 2021, the Witnet Foundation entered into partnerships with Conflux Network, Boba Network, and Metis, and in January with KuCoin Community Chain and Celo. According to Adam Sanchez de Pedro, in February the project will integrate Polygon and Harmony, and during 2022 Avalanche, Moonbeam, Arbitrum, Optimism, Aurora, Klaytn, BSC, xDAI and Solana.
According to the analytical service Witnet Data Feed, more than 50 Witnet price channels are now deployed on 15 main and test blockchains. In 2022, the developers plan to add 150 price channels that will work in 50 networks. Witnet oracles are used by the following projects:
- TriAngle is the leading lending protocol on the Conflux network. It uses the CFX/USDT price channel from Witnet to calculate the AUSD stablecoin loan secured by CFX.
- Agora Space is a social blockchain platform. Using oracles, Witnet gives smart contracts access to decentralized verification of social media data, such as the number of views on YouTube or the number of followers on Twitter.
- Aragon — a framework for creating decentralized autonomous organizations (DAO). Combined with Witnet oracles, it allows vote for suggestions on management in Discord.
In October 2021, developers built an oracle source of random data (randomness oracle) into the protocol. With it, Witnet users can create NFT collections and randomly assign characteristics to tokens. Ethereum Developers Conference Organizers Lisson used this oracle to release an NFT collection Witty Creatures 2.0 on Opensea.
conclusions
Witnet is a decentralized oracle network that provides DeFi services on Ethereum and other networks with secure access to trusted data.
Since the white paper was published in 2017, the team Witnet created a multi-chain ecosystem, and the number of active nodes as of February 2022 exceeded 5000 units.
This year, the Witnet Foundation plans to integrate 11 networks, as well as fund ecosystem projects under grant program. Oracles have become an important infrastructure component of the DeFi sector, so Witnet has every chance to fill this niche.
Subscribe to the Cryplogger channel at YouTube.
Found a mistake in the text? Select it and press CTRL+ENTER
