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Jan 06, 2021

Development Begins for Elastos-native Credit Oracle Network

After a successful launch of the FilDA platform, Elastos Info is pleased to announce the development of a powerful technological component in its budding DeFi ecosystem: a network of Elastos-native decentralized Credit Oracles. Built specifically for Elastos, Credit Oracles will operate in conjunction with Chainlink’s oracle network, tapping off-chain data from both external blockchains and traditional data sources to facilitate the efficient and effective functioning of DeFi platforms across the Elastos ecosystem. In addition, Elastos’ Credit Oracles will play a unique role in providing services related to digital asset ownership and personalized credit issuance. Most importantly, Credit Oracles will draw on Elastos’ network of Delegated-Proof-of-Stake (DPoS) nodes to verify off-chain data, and will only accept payment in ELA, thus establishing a decentralized operating environment and contributing another use case for ELA.

Address Definitions:

Since its inception, Elastos has remained committed to the twin initiatives of secure digital asset ownership and user privacy, each of which implies and requires the other. However, digital asset ownership is not to be restricted to the coins and tokens users exchange in open marketplaces; rather, it should encompass all data that users generate on the web, including search queries, chat histories, social media activity, and more. Ultimately, all of this data shapes not only a user’s social demographic, but his or her financial profile as well. Thus, to be able to attribute data to specific users via Decentralized Identifiers (DIDs) enables the potential for personalized credit issuance models whereby individuals can interact with DeFi applications based on their unique circumstances. For instance, their asset holdings, employment information, income streams, and age may all contribute to the amount of credit they may be eligible to receive.

Of course, such personalized credit issuance models already exist, but only under the scope of gigantic, centralized financial institutions that harvest and retain user data for their own purposes. Accordingly, individuals cannot retain true ownership of their data because personalized services are accessible exclusively at the expense of their privacy, and it is for this reason that individuals cannot truly capitalize on the wealth vested in their data. In order to make for a just evaluation of creditworthiness, users, oracles, and DeFi applications alike must interact in a secure operating environment, where service providers are restricted from accessing user data. Today, the Elastos Smartweb stands as the quintessential decentralized operating environment, already underpinned by secure infrastructure and equipped with the necessary technical components to enable user-directed file storage, private communication, and trustless computation.

Breaking it Down: Technical Components

The following technical components – some of which are already fully operational, and others which remain in development – will all play integral roles in Elastos’ personalized credit issuance models:

DID Sidechain: Using Elastos’ W3C-compliant DID solution, users make secure claims called Asset Declarations on assets they own on external blockchains and beyond. User DIDs can be accessed and referenced by applications to confirm asset ownership, and to link it with other details specific to an individual’s DID.

Elastos Credit Oracles: In order to support users and applications verifying Asset DeclarationsCredit Oracles retrieve off-chain price and ownership data from external blockchains such as Bitcoin, Ethereum, and NEO, as well as assets native to traditional finance such stocks, commodities, and derivative instruments.

Credit Adapters: Within each Credit Oracle, a number of chain- or asset-dedicated Credit Adapters ensure accurate and real-time data feeds. Whereas in the case of external blockchains a Credit Adapter runs a full node so as to provide accurate and real-time data for on-chain assets, in the case of stock market data, a Credit Adapter may source data from a specific, licensed exchange.

Ethereum (ETH) Sidechain: By supporting Ethereum smart contracts, the Ethereum Sidechain enables the development and porting of applications coded in Solidity. Thus, Ethereum-based DeFi applications are easy to develop and run in the Elastos ecosystem, and can benefit from its secure network, substantially improved performance (TPS), and the up-and-coming personalized features presented by Elastos’ Credit Oracle network.

Credit Smart Contracts: All DeFi Applications utilize a series of smart contracts running on the Ethereum Sidechain that provide the interface to directly communicate with a credit service. Credit Smart Contracts transfer requests from DeFi Applications to relevant Credit Oracles, and return the Credit Oracles’ results to DeFi Applications.

DeFi Applications: FilDA, Quicksilver, and others built on Elastos can leverage the services provided by Elastos’ Credit Oracles via Credit Smart Contracts on the Ethereum Sidechain to confirm DID-based Asset Declarations from individuals in the Elastos ecosystem. In doing so, DeFi Applications operate within a model that enables access to personalized financial services without compromising user privacy or extracting the wealth vested in user data.

Putting the Pieces Together: Elastos Credit Oracles in Action

With all the technical components in place and a host of advanced DeFi platforms operating on the Ethereum Sidechain, here is a look into credit issuance on Elastos:

To protect his personal privacy, a user named Tomas wants to utilize FilDA, a DeFi Application in the Elastos ecosystem, in order to leverage the liquidity vested in his BTC holdings. In preparation, Tomas has already made a claim on his BTC holdings via an Asset Declaration that is linked to his Elastos DID. To verify Tomas’ Asset Declaration of 1 BTC on a specified address on the Bitcoin blockchain, FilDA interfaces with a Credit Smart Contract to request the service of an Elastos Credit Oracle. Here, the Credit Oracle receiving the request relies on a dedicated Credit Adapter running a full node on the Bitcoin blockchain, which successfully verifies Tomas’ Asset Declaration, and replies to FilDA via the relevant Credit Smart Contracts. Once it has received verification of Tomas’ Asset DeclarationFilDA offers one or several credit issuance options (financial services) to Tomas. For instance, if Tomas is asset holdings are confirmed to be in excess of 100 BTC, certain liquidity pools may offer him preferential rates for large-volume staking. Whatever his holdings may be, Tomas stands to benefit immensely, as he can leverage the wealth vested in his assets without exposing his identity or other personal information.

The Road Ahead

While the model above entails a simplistic example, as digital infrastructure develops and new applications are launched on blockchain-based infrastructures, user data will increasingly become a personal commodity, and open markets will form around its exchange. With development advancing rapidly, Elastos’ near-term plans focus on utilizing Credit Oracles and their related technical components to facilitate both basic and advanced DeFi functions. However, for a native network of decentralized oracles that can source and integrate off-chain data of all kinds, mid- and long-term applications are virtually limitless. More so, the innovative features and financial services that Elastos-native infrastructure and technical components enable will be difficult to imitate and reproduce, as transaction security and user privacy are properties intrinsic to the Elastos Smartweb – not the applications that occupy it.

As development continues forward on the Elastos ecosystem’s Credit Oracle network, DeFi landscape, and rising technical components, make sure to remain up-to-date and in-the-know on the official Elastos Info Blog.

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