As decentralized finance (DeFi) continues to grow and evolve, the demand for oracles – key tools that connect blockchains to real-world data – is surging. Established providers such as Chainlink face increased competition from emerging players as decentralized applications (DApps) require more efficient data delivery solutions.

Interview with Marcin Kaźmierczak

Marcin Kaźmierczak, co-founder and chief operating officer of RedStone, discussed trends in DeFi oracles in an exclusive interview with Cointelegraph. Kaźmierczak highlighted the rapid changes in DeFi and the potential shakeup of oracle providers.

Entering a New Phase

Kaźmierczak stated that the oracle market is entering a new phase driven by innovation and multichain adoption. He noted that this new phase is characterized by increased competition, with established providers like Chainlink facing challenges from emerging players.

"When Chainlink was created, there was no such thing as L2 or DeFi on multiple L1s, therefore, the design wasn’t optimized for multichain delivery."

This comment underscores the limitations of existing oracle designs in meeting the demands of a rapidly evolving DeFi landscape. The rise of layer-2 networks and non-Ethereum Virtual Machine (EVM) chains has exposed scalability limitations in existing oracle designs.

Scalability Limitations

Kaźmierczak noted that each new network presents ‘a big dependency and technical cost’ that was not accommodated initially. This demand has revealed new ‘challengers’ that are more efficient in supporting new ecosystems.

Some of the newcomer networks mentioned by Kaźmierczak include:

• Berachain
• Unichain (Uniswap’s L2 network)
• Ink (Kraken’s L2 network)

These emerging players are poised to challenge established oracle providers, offering more efficient solutions for DApps and DeFi platforms.

Decentralizing without Over-Engineering

The question of how oracles should be decentralized is a topic that continues to be discussed. Some experts advocate for embedding oracles directly onchain, while others argue that this approach stifles innovation and locks protocols into specific designs.

Kaźmierczak voiced concerns about the embedding approach, arguing that it is not an efficient path forward. Instead, he suggested leveraging staking technology and distributing security risks while allowing oracles to remain independent and adaptable to technological changes.

"A better and more efficient path could be made by leveraging staking technology and distributing security risks while allowing oracles to remain independent and adaptable to technological changes."

This approach prioritizes flexibility and adaptability, enabling oracles to evolve with the changing needs of DeFi platforms.

Outlook for Oracles

While acknowledging that Chainlink remains a powerful force with deep – and growing – industry roots, Kaźmierczak reiterated that the fast-paced nature of DeFi leaves room for challengers.

"We are not so much obsessed with being first, as we are with delivering value to clients and constantly growing."

With expectations of crypto-friendly policies under the incoming administration of United States President-elect Donald Trump, the RedStone co-founder told Cointelegraph that he expects a ‘bullish wave across DeFi platforms.’

Conclusion

The oracle market is undergoing significant changes driven by innovation and multichain adoption. Established providers like Chainlink face increased competition from emerging players, with new challenger networks offering more efficient solutions for DApps and DeFi platforms.

As the demand for oracles continues to surge, it remains to be seen how the oracle market will evolve in the coming months and years. However, one thing is clear: the future of DeFi oracles will be shaped by innovation, competition, and a commitment to delivering value to clients.

Related Articles

• Scaling a Multichain Ecosystem: As layer-2 networks and non-EVM chains emerge, DeFi platforms require more efficient data delivery solutions.
• RedStone Launches Oracle AVS on EigenLayer: RedStone’s latest innovation brings advanced oracle services to the EigenLayer network.
• Decentralizing without Over-Engineering: The debate surrounding decentralized oracles continues, with some experts advocating for direct onchain embedding.