Optimistic Oracle


An optimistic oracle uses a dispute/arbitration process to ensure data accuracy. This compares to a price-feed oracle, which relies on nodes to provide consistent price feed data on-chain.

What Is an Optimistic Oracle?

An optimistic oracle is an oracle where real-world data is integrated with decentralized systems (e.g. blockchains), and the data is accepted as true if it is not disputed during a certain period. The “optimistic” design differs from a price-feed oracle, where prices are streamed on-chain but without any recourse or error protection.

Because of the unique design, optimistic oracles can be used in different ways than price-feed oracles. In addition to the price of an asset, they can serve arbitrary data, and “long-tail” information requests that might not be feasible for price-feed oracles to support.

The optimistic oracle also protects smart contracts and users against manipulation of the external data feed, since incorrect data can be disputed. This is a unique feature, as other oracle solutions are only as secure as their data feed.                

Author: Hart Lambur

Hart is the co-founder of UMA, a decentralized financial contracts platform built to enable Universal Market Access. He studied computer science before working as an interest rate trader at Goldman Sachs through the financial crisis. In 2013 he co-founded Openfolio, a personal finance tracking platform that was acquired in 2017 by a financial planning firm. He now leads a team of financial contract and oracle design researchers at UMA.