Buterin Plugs UNI as Next Oracle Token
The DeFi space is in a constant state of change with new platforms, tokens, and services popping up every day. With the billions of dollars already being put in the industry and the greater investment to come, crypto users and investors are constantly on the lookout for the next big platform or token.
Now, according to Ethereum creator Vitalik Buterin, Uniswap’s UNI token could be an oracle token for the next successful DeFi ecosystem. This was in the official proposal on Uniswap governance on May 11, 2021. In the proposal, Buterin made arguments for why the UNI token would be a good fit.
UNI to the Rescue
Buterin’s endorsement of the UNI token is based on his analysis of several DeFi areas that rely on a price oracle. This price oracle, he feels, can be provided by Uniswap and its native token. Oracles are one of the most important aspects of a DeFi platform as it is the data feed that connects blockchains like Ethereum to real-world information which then influences the behavior of smart contracts. This data has to be extremely accurate else users will not enjoy the full benefits of the platform and errors will take place.
Currently, Chainlink is perhaps the most famous price oracle in the crypto industry and while Buterin has clarified that he has no issue with Chainlink, he feels that other alternatives should be looked at.
Some of the improvements that can be made to the existing system include an automated mechanism to penalize false data providers and better incentives. With this in mind, Buterin has suggested that Uniswap should model its oracle after the UMA or Augur design for more robust data.
He also feels that UNI is in a good position to be the token for a decentralized oracle. The reason for this is the high market cap of UNI which he feels is important as it would discourage attacks on the network.
Buterin has stated that a cost of attack “is absolutely essential to maximize, and thus market cap is key,” is and thus far, crypto users seem to agree with his belief.
“.@VitalikButerin confirms what we’ve been talking about for months – @chainlink is vulnerable, useless and prone to obsolescence. The future of price oracles lies with AMMs. $LINK is doomed,” said one crypto expect Zeus Capital.