More Data, Less Cost: the Quiet Revolution in Blockchain Oracles

Blockchain oracles are fast becoming important elements within decentralized ecosystems by acting as essential data bridges between blockchain-based applications and the analogue world. Despite their growing importance, existing oracle networks face a number of persistent challenges that limit their scalability and affordability. As demand for real-time data grows, solving these pain points is important. Traditional push-model architectures, where each data update incurs separate gas fees, are not only cost-prohibitive but can also strain network capacity under heavy demand. Additionally, many oracle providers maintain centralized control over data feeds, constraining developers with high fees and limited flexibility, thus restricting true decentralization and innovation potential.

Yet, the oracle landscape is changing. Emerging protocols are exploring decentralized, cost-effective models that enhance data accessibility and transparency. These new approaches aim to minimize gas costs through aggregated data updates and zero-knowledge (ZK) rollups, optimizing efficiency without compromising data freshness. Through decentralized consensus models, such protocols can also empower developers to create customized, secure data feeds on demand, paving the way for a broader range of decentralized applications across finance, gaming and beyond. We spoke to Zahary Karadjov, CEO of Blocksense (a company looking to help optimize the operation of blockchain oracles) to understand his vision and outlook for the industry.

1. Zahary, welcome! Let’s start by discussing the current state of blockchain oracles. Where do things stand today?

Thank you. As you already know, oracles have become indispensable as dApps increasingly rely on real-world data to function effectively. They bridge the gap between blockchain systems and external information, enabling smart contracts to operate dynamically and autonomously.

Right now, you’ll mostly see oracles in action in DeFi, where they’re heavily used for price feeds. Essentially, helping smart contracts react to shifts in asset values in real time. What we’re also seeing these days is the use of oracles beyond DeFi, in areas such as gaming, insurance, supply chain and even AI. The technology has evolved quite rapidly over the past few years, but there are still some important challenges to overcome before oracles can fully live up to their potential.

2. Could you expand on what these challenges are?

Sure. First up is cost. Many oracles use what’s called a push-model setup, where each data update is treated as a separate transaction. When you need frequent updates to keep data accurate, this can get very expensive, fast. And during times of network congestion, gas fees can skyrocket, making this model tough to justify economically for a lot of use cases.

Next is centralization. Even though oracles are designed for decentralized systems, many of them still lean heavily on centralized methods, whether it’s about choosing data sources or aggregating information. This centralization can clash with the whole idea of blockchain and creates potential risks, like single points of failure.

And lastly, we’ve got issues around data freshness. Some oracles take time to aggregate data, which may not matter in every situation, but for things like decentralized finance, even small delays can lead to big financial impacts.

3. What technical innovations do you see as the most promising solutions to these issues?

Cost reduction can be achieved through ZK for proving the result of voting. This allows for arbitrary computations and makes oracles viable for high-frequency data feeds or real-time applications that would otherwise be too expensive. This approach drastically reduces the number of on-chain transactions by packing multiple updates into a single proof, which leads to substantial savings on gas fees.

To tackle centralization, it’s important to embrace permissionless data feed creation and more transparent governance mechanisms for data providers. By allowing anyone to contribute data feeds and utilizing decentralized consensus mechanisms like SchellingCoin game theory, we can ensure that no single entity has undue influence over the data being reported. This approach also helps in mitigating collusion risks and makes the network more resilient.

Regarding data freshness, we need to ensure that updates are delivered with minimal latency. Implementing a more sophisticated assignment and rotation of oracle nodes can improve timeliness by ensuring that data sources are always up-to-date and that no single node is responsible for updating too many feeds at once. This allows for quicker reaction times and more accurate data.

4. You described oracles as "the bridge" between blockchains and the real world. How do you see this role evolving in the future?

I think it will evolve significantly. Currently, oracles primarily bring external data into blockchains. In the near future, oracles will become two-way systems, able to write actionable outputs back into off-chain systems securely. This will unlock use cases like triggering real-world events based on smart contract logic, such as managing autonomous vehicles or optimizing energy grids.

And as blockchains become more interconnected, I see oracles playing a vital role in enabling seamless cross-chain data flow. This could pave the way for applications across multiple ecosystems, which will create a more unified blockchain space.

5. What do you think needs to change culturally or institutionally for oracles to reach their full potential?

Accessibility and decentralization must take precedence. The current model, where a small number of players control the oracle ecosystem, limits innovation. We need a permissionless framework that lowers entry barriers for developers and encourages broader participation.

At the same time, education is critical. Many developers don’t fully understand the capabilities or constraints of existing oracle solutions. By providing better tools, documentation and community support, we can help more people explore and contribute to this space effectively.

6. Before we wrap up, can you tell us about any projects or innovations you’re particularly excited about?

The area I find particularly exciting is the shift towards more open and programmable oracle systems. The concept of the oracle as a programmable two-way system I mentioned earlier. At my company Blocksense, we’ve developed tools that will allow developers to create such customized data feeds and validate them securely using cryptographic techniques like zero-knowledge proofs. As for tackling centralization, we are using the SchellingCoin game theory approach I mentioned earlier to keep all data accurate without being dependent on any central authority. These innovations address some of the most persistent issues in the space, like ensuring data reliability and reducing entry barriers for new use cases. I’m excited to see how our approach could enable a wider range of decentralized applications, from real-time (e)sports results and weather updates to supply chain metrics, IoT sensor data and AI-powered prediction markets, to operate more efficiently, securely and affordably.

Building beyond today’s constraints

Speaking with Zahary, it’s clear that blockchain oracles are entering a pivotal stage in their evolution. The innovations emerging in this space, including the work being done by his team, reflect a broader reimagining of trust, accessibility and scalability in decentralized systems. By tackling long-standing challenges like cost and centralization, the industry is beginning to unlock new opportunities for developers and businesses alike.

This transformation is just the start. As technology advances and demand for real-world blockchain applications grows, the need for robust, adaptable and secure oracle systems will only intensify. The path forward will require collaboration across the ecosystem and a shared commitment to ensuring these systems remain open, reliable and fair. If the current momentum is anything to go by, the future of oracles holds enormous potential.