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In addition to data aggregation, Umbrella also needs to create a decentralized oracle that is not affected by any risk, manipulation or attack.
Written by: Sam Kim and Alice Qu
As more and more decentralized applications land, oracles, as a bridge between the blockchain world and the real world, have become one of the hottest tracks at the moment, and the leading project Chainlink has also achieved success in 2020. The market value has grown quite astonishing, but with the success of Chainlink, there are also doubts about its centralization. For the DeFi world named after “decentralization”, the market is looking forward to the emergence of a “decentralized oracle” that is easy to use.
Umbrella is a truly decentralized, scalable, and community-governed oracle built on Polkadot. Umbrella can safely, cheaply, and large-scale bring a wide range and diverse real-world data combination on the chain. To help further promote growth and innovation within the DeFi ecosystem.
Problems Umbrella wants to solve
The DeFi world needs safe and reliable data sources. However, there are mainly several types of problems in the solutions of various oracles in the current market: one is slow speed, low efficiency or high cost; the other is data security and timeliness. It is impossible to have both; in addition, most of the current oracles are centralized or partially centralized solutions, which to some extent violate the “initial intention” of DeFi decentralization.
The development team of Umbrella Network hopes to solve the above problems and provide the market with a decentralized oracle solution that is easy to use. Umbrella is the first decentralized oracle on Polkadot, which can safely bring external data to the chain and provide the community with the scale and security “standard” data services required by the DeFi project.
Current oracle solutions require users to choose between data security and timeliness. Umbrella can provide data with both security and timeliness.
Umbrella will use multiple data sources to ensure that users will not be exposed to the risk of data manipulation at the source. Secondly, Umbrella also uses Delegated State Proof (DPOS), while providing economic incentives and restraints, which is similar to most current markets. The alternatives are different. In addition, Umbrella’s 2-layer solution uses Merkle trees to aggregate data into a single transaction.
Other current oracle solutions deal with a single data set for each blockchain transaction, and therefore face the dilemma of slow speed and high price. Umbrella can provide low-cost data sources that can meet the needs of emerging blockchain solutions, providing medium and long-tail assets, options, indices, synthetic assets, and many other types of data that cannot be provided by other current solutions.
Umbrella’s token economic model
Umbrella’s token UMB aims to encourage long-term Umbrella token holders, and users can get rewards by depositing UMB into the DPOS system. Rewards are issued through Umbrella’s auxiliary token, rUMB. rUMB can be exchanged with UMB, but it can only be used after 1 year or after Umbrella’s business reaches certain milestones.
Umbrella’s token economics structurally favors long-term holders rather than short-term speculators. First, the public sale will only account for a small part of the overall assets. In addition, the core team’s token distribution will be released in a linear manner within 4 years. Therefore, there will not be any large-scale unlocking in the initial stage. Finally, nearly two-thirds of the tokens will be allocated to Umbrella’s community governors for a long time (including through public sale, validator funds, partner funds, etc.), hoping to find loyal users who match the team’s vision.
Sam Kim, the founding partner of Umbrella Network, has spent almost his entire career in the technology industry building high-performance systems related to advertising technology, video games and mobile phones. Sam is currently the founder and CEO of Lucidity. Lucidity is a digital advertising platform running on Ethereum that can handle large-scale advertising transactions and provide services to customers such as Toyota, KFC and GroupM. He adopted some of Lucidity’s concepts and brought them to Umbrella. In addition, a large part of the team has been working together on blockchain project development for more than 4 years.
Competitive product analysis
Chainlink is currently one of the main players in this field. Their aggregator contract securely obtains data from multiple off-chain sources, takes the average value, and then reaches a consensus through the authorization certification system, and writes it to the chain. But Umbrella believes that Chainlink faces multiple challenges:
- Chainlink is a proof of authority, but who is granting the authority is contrary to the concept of decentralized finance.
- Chainlink writes one data in a chain transaction at a time. This is very expensive. When the gas price is high, the cost per piece of data may be as high as $100.
- Chainlink mints more tokens like a central bank.
On the other hand, projects like API3 focus on the liveliness of the data. It assumes that the data provider cannot be manipulated and is providing safe and accurate data. But when users collect data from NYSE or NASDAQ, they sometimes encounter problems such as lack of accuracy of data or system failures.
But for more complex DeFi projects, they need a safer oracle. Umbrella anchors thousands of data in a single blockchain transaction. Moreover, Umbrella performs this operation by entrusting the proof-of-stake system to make it cheap, not only to provide real-time latest data, but also to ensure its security.
The oracle occupies a pivotal position in the blockchain field and determines whether the value of various blockchain systems can be realized. It is precisely because of the complexity of oracle technology and the diversity of the real world that this field is still in the exploratory stage. Although the prospects in the oracle field are good, it is difficult to achieve.
Umbrella’s goal is to create an oracle with a truly decentralized network that is not affected by any risk, manipulation or attack, providing a low-cost, secure data solution, and becoming a high-capacity, scalable, and diverse data product . In the future, Umbrella will solve various problems such as the lack of security and timeliness of data in other oracles, the low degree of project realization, and low community activity.
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