You're reading from The Essential Guide to Web3 Develop, deploy, and manage distributed applications on the Ethereum network

Product type Paperback

Published in Nov 2023

Publisher Packt

ISBN-13 9781801813471

Length 366 pages

Edition 1st Edition

Tools

Ethereum

Concepts

Blockchain

Author (1):

Vijay Krishnan

View More author details

Table of Contents (25) Chapters

Preface

1. Part 1 – Introduction to Web3 FREE CHAPTER

2. Chapter 1: Fundamentals of Blockchain and Web3

3. Chapter 2: Getting Started With Ethereum

4. Chapter 3: Your First Ethereum Transaction

5. Part 2 – All about Smart Contracts

6. Chapter 4: Introduction to Smart Contracts

7. Chapter 5: Creating and Deploying Your First Smart Contract

8. Chapter 6: Smart Contract Security and Access Controls

9. Part 3 – Writing Your DApps for Web3

10. Chapter 7: Developer Tools and Libraries for Web3 Development

11. Chapter 8: Writing and Testing Your First dApp on Web3

12. Part 4 – Fungible Tokens

13. Chapter 9: Introduction to Tokenization

14. Chapter 10: Creating Your First Token

15. Part 5 – Non-Fungible Tokens

16. Chapter 11: Non-Fungible Token Standards

17. Chapter 12: Creating Your First Non-Fungible Token

18. Part 6 – Web3 Advanced Topics

19. Chapter 13: Understanding Oracles

20. Chapter 14: Zero-Knowledge Proofs and Zero-Knowledge EVMs

21. Chapter 15: L2 Networks and Rollups

22. Chapter 16: Decentralized Autonomous Organizations – Overview

23. Index

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Understanding the oracle problem in Web3

In Web3, the oracle problem refers to the challenge of ensuring the integrity and accuracy of data provided by oracles to smart contracts on the blockchain. The problem arises because smart contracts rely on external data to trigger actions and make decisions, but that data may be untrusted, unreliable, or manipulated. Figure 13.3 shows that blockchains or smart contracts do not have a direct way to take or look up external data sources such as weather data. This is also because of the core operating principles of a blockchain, which means it is non-deterministic. Another problem with blockchains is that they have limited integrations with enterprise systems, market data, and data based on events. Therefore, you need an oracle so that a smart contract can really be smart!

Figure 13.3 shows a view of a single point of failure for the data sources. Imagine that all your data comes from one place, such as a single giant computer. If that computer...