How Does a ‘Merkle Tree’ Relate to Off-Chain Data Verification?
A Merkle tree (or hash tree) is a cryptographic structure used to efficiently verify the integrity of large sets of data. In off-chain aggregation, all the individual data reports from the oracle nodes can be organized into a Merkle tree.
Only the single 'Merkle root' is submitted on-chain. A smart contract can then verify that a specific data point was included in the aggregated set by checking its 'Merkle proof' against the root, proving data integrity cheaply.
Glossar
Oracle Nodes
Agent ⎊ Oracle Nodes are the distributed set of actors or software instances responsible for fetching external data, aggregating it, and submitting the resulting validated price feeds onto the blockchain for use by DeFi applications, including options platforms.
Data Integrity
Provenance ⎊ Data integrity within cryptocurrency, options trading, and financial derivatives fundamentally relies on establishing an immutable provenance for each transaction and data point.
Off-Chain
Framework ⎊ The term "Off-Chain" within cryptocurrency, options trading, and financial derivatives broadly denotes activities, data storage, or computations that occur outside the primary, on-chain ledger or exchange infrastructure.
Merkle Tree
Architecture ⎊ A Merkle Tree, within cryptocurrency and derivatives, functions as a cryptographic verification tool, efficiently summarizing and securing large datasets of transaction information.
Cryptographic Structure
Architecture ⎊ Cryptographic structure, within cryptocurrency, options, and derivatives, fundamentally defines the underlying security model governing asset ownership and transaction validity.