What is the Chronological Oracle Problem?

Gm everyone!

Does anyone know where I can find a Layman’s explanation/example of the chronological oracle problem? I would like to understand the problem and how blockchain solves it but can only find technical resources which raise more questions than answers.



1 Like

hello @erikvanwinkle , this question will be addressed to an expert hopefully we can get a response but you can also post the technical resources here, hopefully, it makes the subject matter lucid for others on the forum .

1 Like

@erikvanwinkle I hope this meets your needs

oracle image

  1. What justifies the need for “Oracles” on the Blockchain?

The term “oracle” comes from Greek mythology and refers to a person who possesses the extraordinary capacity to communicate with God and foretell the future. Legends from the past say that when people lacked the capacity to make decisions, they turned to oracles for knowledge that was beyond their grasp. In the context of a blockchain, oracles are systems that provide the blockchain with data from the outside world. A gateway from the outside world is necessary if smart contracts handle decentralized processes other than cryptocurrency exchange, such as weather, stock prices, or political events.On a blockchain, it is not possible to combine extrinsic data with transaction data because doing so would go against the consensus rule and signal other nodes that the information is coming from a “untrusted” source. As a result, information about the present should come from an oracle, an independent, univocal source whose dependability is indisputable for all nodes. As in Greek mythology, blockchain-based oracles recover information from the past rather than foretelling the future. To be more specific, Oracles actually gather and store data from the outside world instead of immediately adding it to the blockchain. When a smart contract using extrinsic data is executed, the code then looks up the necessary information from a trustworthy oracle. IoT components such as sensors and probes are illustrative of oracles.
Oracles include IoT devices like sensors and probes, platforms like ERP, and, in the case of private data, real humans who operate on the blockchain. By transforming non-deterministic data from the outside world into a blockchain-compatible format, oracles act as a bridge.

Some examples of data that oracles have gathered include the following:

winners of lotteries; natural disasters and risk analysis;
valuations and exchange rates for physical and digital assets;
static data (such as country codes);
dynamic data, such as time measurements;
weather conditions;
developments in politics;
sports events;
information about geolocation and tracability;
Incidents on other blockchains; accidents.

  1. The Oracle Blockchain Problem

The oracle issue has to do with the reliability and credibility of oracles in connection to blockchain and smart contracts. Curran described the contradiction between third-party oracles and the trustless execution of smart contracts as “the security, authenticity, and trust issue” (in the context of the blockchain). To the best of the author’s knowledge, the construct’s original source is Dalovindj’s Reddit post, which was published prior to the launch of the Ethereum platform for smart contracts. The writer claimed that when executing an application on the bitcoin blockchain addressing crowdfunding or gambling, it was in reality difficult to verify the correctness of extrinsic information without modifying the consensus process. He refers to this as “The Oracle Challenge.”

Egberts described the oracle problem as a “two step-back from decentralization” in his dissertation, going into considerable depth about its drawbacks. Since oracles are not disseminated, the single-point-of-failure was once again introduced. Additionally, because they deal with non-deterministic data, they preclude non-trusted peer-to-peer interaction. The use of smart contracts for its implementation may undermine users’ trust in the blockchain, who believe it to be more reliable than traditional systems. An oracle-based system can collapse in one of two ways, as Antonopoulos so expertly showed. There is always a chance that the data being processed by the oracle has been altered, even if it is trustworthy and unbreakable. In this scenario, despite being a trustworthy gadget, it will provide data to the smart contracts. Even if the information is accurate and trustworthy, there is a potential that a mistake or malicious manipulation might prevent the oracle from performing as intended on the smart contract. A game-theoretic approach may be used to show how the value of the smart contract influences the incentive to violate the system. The oracle problem also arises when real assets are linked to the blockchain via smart contracts. Song explained in a well-known study the importance of tying physical assets like cars, homes, and fruit to digital ones in decentralized systems. Unlike smart contracts, which may be subject to stricter rules, tangible assets are governed by the laws of the nation in which they are situated. This actually requires confidence in sources other than the smart contract. If, for example, a smart contract specifies that a property be transferred between two agents, the algorithm will exchange the certificate between the parties.


images (6)

How can sandwich attacks be thwarted in Kyber DMM??

A protection against this would also minimize sandwich attacks because transaction reordering is the foundation of sandwich attacks. Confidentiality, transaction sequencing, and the (improved) commit/reveal technique are known potential mitigating measures in the literature.

Kyber’s situation is a little bit more unique because the vulnerability occurs in the virtual reserve that is created due to the amplification factor. The issue still remains if users directly mint liquidity through the pool contract because Kyber’s current mitigation is only present in the router.

The function used by the router to add liquidity accepts two parameters: one to set the virtual reserve ratio’s lower bound and one to specify its upper bound. The recommendation is to implement a similar code correction in the pool contract’s mint function. The first attacker transaction is rendered meaningless by this mitigation since the victim’s transaction is canceled if it exceeds the lower or upper bounds that the victim specifies. In this case, the attacker becomes the victim because they pay the gas costs but receive little in return.
A sandwich attack only affects customers who directly inject liquidity to the pool contract. Kyber discourages this method of boosting liquidity, and the sole situation where such an act makes sense is when the interface
is down. Thus, there is a low chance for this attack to occur.