openOracle

Overview

openOracle is designed to be a trust-minimized way to get token prices that anyone can use. The oracle uses an escalating auction during disputes to make manipulation of the reported price costly. In the average case, the capital required to report accurate prices can be much lower than the notional amount settled by the reported price. The goal is to replace the current set of centralized and trusted oracle intermediaries so defi applications can have fewer points of failure.

At its most basic level the oracle works by having a reporter submit both a limit bid and ask at the same price. Anyone can swap against these orders minus a small fee. If nobody takes either order, it is evidence of a good price that can be used for settlement. The rest of this document deals with the challenges around this kind of auction expiration design.

The current design is still critically vulnerable to multi-block MEV & block time manipulation. So given that the smart contract sits on Arbitrum, it is still trusting the sequencer.

DISCLAIMER

The contract and protocol is still in the research stage but it is on-chain so we can test the economic incentives since these are critical to the design.

The contract was basically written by chatGPT and then I took a look and corrected where issues were found. It has not been audited. Users should be prepared to lose all funds when interacting with unaudited contracts. Another thing that has not been audited is the game theory and statistics. Users should be aware that even in the case of perfect solidity it is highly likely there are math and game theory errors that not only render this endeavor moot but also put user funds at risk. Even if it works, misconfiguration can lead to the loss of funds. Proceed with care.