How Does a Decentralized Oracle Network (DON) Achieve Data Consensus?
A DON achieves consensus by aggregating data from multiple independent oracle nodes and data providers. Each node fetches the same data from various sources.
The DON then uses a pre-defined aggregation method, such as taking the median or a weighted average of the reported values. This collective validation and aggregation process ensures a high degree of data accuracy and resistance to single-node manipulation.
Glossar
Decentralized Oracle Network
Network ⎊ A Decentralized Oracle Network (DON) facilitates secure and verifiable data feeds from external sources to blockchain environments, crucial for smart contract functionality within cryptocurrency derivatives and options trading.
DON
Derivation ⎊ Within cryptocurrency derivatives, DON, often referencing "Digital Option Network," signifies a nascent framework for decentralized options exchanges leveraging blockchain technology.
Independent Oracle Nodes
Attestation ⎊ Independent Oracle Nodes function as critical components within decentralized systems, providing verifiable data feeds essential for the execution of smart contracts and derivative instruments.
Data Accuracy
Precision ⎊ Within cryptocurrency derivatives and options trading, precision denotes the degree to which observed data reflects the true underlying value, critically impacting model calibration and risk assessment.
Staking Collateral
Collateral ⎊ Within cryptocurrency ecosystems and derivative markets, collateral represents assets pledged to secure obligations, primarily mitigating counterparty risk.
Weighted Average
Calculation ⎊ Weighted Average is a statistical calculation where each data point contributes to the final mean in proportion to an assigned weight, rather than equally.