Polkadot Plunges by 99%: Chainlink Founder Asserts Oracle’s Potential to Prevent NYSE Malfunctions
Due to a technical glitch at the New York Stock Exchange (NYSE) on Monday, the price of Berkshire A shares, owned by Warren Buffett, experienced a sudden drop of nearly 100%, causing market chaos. This unexpected decline led to the temporary suspension of trading for multiple stocks. Sergey Nazarov, co-founder of Chainlink, explained the important role that Chainlink’s oracle can play in such situations.
Chainlink’s decentralized oracle network, invented to address inherent vulnerabilities in centralized systems, can reduce these risks by providing accurate and tamper-proof data. These networks aggregate data from various sources and use consensus mechanisms to verify messages, ensuring data integrity and preventing erroneous transactions and price manipulation. Combining blockchain technology allows for real-time verification and automated responses to abnormal situations, thereby enhancing the reliability and transparency of today’s financial markets.
The invention of oracle networks like Chainlink aims to solve the problem of real-world price data for smart contracts. Smart contracts, in reality, are not very smart – they require real-world prices to settle contracts, including futures contracts and flash loans, among other products. Without this valuable data, contracts are just a few lines of code with no practical use in the business or financial world.
Oracle networks provide smart contracts with the real-world data they need to function as financial instruments and business contracts. They use a decentralized node network to process and verify data, ensuring that data does not come from a single source and preventing single point of failure inherent in centralized information systems.
The Depository Trust & Clearing Corporation (DTCC) seems to have also recognized this issue and recently partnered with Chainlink to enter the digital asset space. Their Smart NAV pilot, utilizing blockchain technology, aims to enhance data dissemination in the financial market and explore new opportunities for financial services through the integration of digital assets. Industry partners involved in this collaboration include prominent Wall Street giants such as BNY Mellon, JPMorgan, Franklin Templeton, Invesco, and State Street, indicating that traditional financial institutions have also been aware of this problem.
