The HUMAN Protocol Foundation has started work on DeFi. Data labeling work will continue, but the Foundation will focus more on providing a set of oracles to increase the decentralization and robustness of DeFi protocols. This was reported through their official blog.
“We have already started working with Pyth, a DeFi oracle provider, to offer our job launch and job verification technology to feed DeFi data,” they stated in the blog.
Among other things, they explained: “Oracle failures can be massive. For example, a trading bot acted on a price oracle that broadcast the KRW price as 1,000 times higher than it was true, and ended up winning $1 billion from Synthetix. This is just one example – there are many more, clarifying the need for a secure and robust oracle infrastructure in DeFi.”
It should be noted that oracles are important to blockchains, for its operation, its integrity and its success. A blockchain with flawed, poor, compromised, or centralized oracles can lose the very purpose of its design as a distributed network.
Oracles provide and record data from external sources to on-chain smart contracts. They are a critical component of the execution of smart contracts.
“Since oracles can be used to mine any real-world data on-chain, they can greatly expand the utility of blockchains. However, they also pose a risk as a point of failure, a point of trust, especially since the blockchain has to trust the data it receives.
HUMAN as oracle?
In the Human Protocol blog they detailed how the process would be when using the HUMAN protocol to feed an oracle:
A DeFi protocol requests a bitcoin price update 15 minutes earlier.
Work is launched as a smart contract in the HUMAN Protocol
The job is distributed to a certain number of respondents
The worker, in this situation, is asked to follow a link to a reliable source of price information, from which they can assess the price, and enter their conclusions via the DeFi protocol’s HUMAN API.
“The main use case in this scenario would be the arbitration of disputes,” they specified.
They then added: “Contention management is something that robust decentralized protocols need to implement if they want to be truly trustworthy.”
Scope
The Human blog also listed some examples of areas where HUMAN could be applied:
- loan protocols
- Cryptocurrency-backed stablecoins
- Decentralized prediction markets
conclusion
“DeFi protocols are designed to return power and rewards to individuals. They are designed to bypass the large central entities that typically govern financial services. So it makes sense for them to be based on technology powered by individual human beings; a technology that values and enhances the voice of individuals, coordinates them as the voice of many, and rewards them for their work and contribution, no matter how small”, they concluded.
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