Decentralized platforms and blockchain-enabled smart contracts are transforming the way digital transactions are performed.
Distributed ledger technology (DLT) has the potential to streamline the key processes carried out in many different sectors by eliminating the need for third-parties and enabling automated contract terms and conditions, which can be based on fixed criteria.
During the last year, the blockchain and crypto space, which includes DeFi, has been gaining a lot of attention as well as increased adoption globally. The decentralized finance space was only valued around $400 million in early 2019, but then the ecosystem grew to reach the $1 billion mark by February 2020. Recently, the DeFi market approached the $100 billion mark and is valued at over $92 billion at the time of writing, according to DeFi Pulse data.
The DeFi space is supported by smart contracts, which aim to lower the overall costs and enhance the efficiency of routine business processes. They’re effective at reducing counterparty risk and also offer greater transparency, because they leverage DLT to eliminate the role of third-parties.
Smart contracts are also used to help maintain accurate records, settle monetary transfers, support supply chain processes, conduct real estate transactions, and for blockchain governance purposes, among many other use-cases. Although they have a wide range of applications, smart contracts may not execute in an efficient manner in different scenarios.
For example, smart contracts are not designed in a manner that allows them to be integrated with or other independent/external systems. A financial smart contract may rely on updated market information to determine the amount of funds each party in a transaction should receive.
These processes require proper documentation as well as virtual signatures. Notably, smart contracts are unable to use traditional services to access information while making sure that the terms of contracts are satisfied. These contracts are also unable to automatically generate the information needed to finalize certain types of transactions. To address these issues, Oracles are now being used to enable smart contracts to handle real-world data. Decentralized oracles can accurately verify the authenticity of data.
However, these solutions have certain drawbacks. Adding Oracles to support DLT transactions violates a key property of blockchains, which is to make sure that the transfers remain trustless without being affected by the actions of intermediaries.
Oracles are basically third-parties and adding them to transfers might lead to an unacceptable amount of external influence. The validity of Oracles might be questionable and this could compromise the trustless nature of DLT or blockchains networks.
Many decentralized protocols and platforms have been focused on implementing decentralized Oracles, and their drawbacks, as it pertains to smart contracts, have been extensively documented. QED is a platform that’s focused on addressing these issues with a new approach.
When using the QED solution, every financial contract gets embedded in a trustless and smart contract-based environment. In order to provide adequate security and sufficient decentralization, protocols can exchange information without involving third-parties.
To promote the use of these services, Oracles will be issued QED tokens, along with a special incentive to maintain their ownership. Only Oracles will be tasked with managing the protocol, thus helping to boost the overall accuracy. The most significant benefit of QED is that it’s based on an automated process that requires no third-party involvement and a 100% accurate determination of Oracle dependability.
By ensuring that the parties don’t have to take any extra steps except for determining a fee to carry out the requirements of the contract, this approach ensures that the smart contract stays decentralized. It also guarantees that no other agreements or arrangements are needed.
QED also has special base software, called the DelphiOracle, which has become one of the most widely-used Oracles on WAX_io, with more than 1,400 actions each hour. DelphiOracle has been in the market for around 3-4 years, so it managed to survive through the different challenges the crypto space has encountered. Its developers claim that it’s a robust solution, backed by experienced contributors. One of the most frequently-used Oracle software programs on WAX is becoming a token on its own (called QED).
QED has been developed by Origin, which is described as a decentralized Oracle protocol and aggregator with an innovative economic model connecting several different blockchains, smart contract platforms as well as off-chain data sources.
Although other Oracle protocols have been focusing on technological innovations (offchain/high throughput/high frequency etc) in Oracle systems, there’s not enough that’s being done to meet the commercial prerequisites when providing and aggregating real -world data for a blockchain.
QED claims to be the first model to offer a viable solution that scales on the technological and commercial aspects. QED aims to embed financially-dependable recourse mechanisms, and other commercially-oriented features.
QED is the iteration of the DelphiOracle, which has been live and running for several years. The team claims that they have approached QED’s architecture with a broad data set on Oracles.
As explained by its development team, QED will integrate with public or permissionless blockchains, and its economic model may be leveraged separately with competing Oracle protocols, which means that Chainlink (LINK) ’Oracles may be clients of the QED system as well.
The main smart contracts for the system are executed on the UX Network, a blockchain that’s able to handle around 20,000 transactions per second. Additionally, it offers a “trustless” bridge that enables QED to link up with other DLT networks.