Thread by @ChainLinkGod

1/ There are multiple nuances that are glossed over in this thread in an attempt to paint a particular adversarial driven narrative (to promote API3)

@Chainlink supports different types of oracle nodes: data provider run nodes, data provider approved nodes, and DevOps run nodes

https://twitter.com/filthy_casualx/status/1405124333954084865

2/ Data provider run nodes (e.g. Kaiko, Nomics, etc) leverage their own server infrastructure to operate their Chainlink nodes

This indeed requires operational expertise in oracle & blockchain infrastructure, because this is mission critical infrastructure with billions at stake

3/ Data provider approved nodes leverage infrastructure from service providers to bootstrap their Chainlink node (like how firms use AWS, GCP, Azure as their infrastructure)

Data providers publicly signal their official Chainlink node, which only provides access to their data

4/ Data providers just pay infrastructure costs to the service providers (just as you do with cloud services), while the data provider receive direct profits every time their data is purchased from smart contracts

Abstracts away complexity and lowers the barrier to entry

5/ Data providers often *choose* to take this avenue as it allows them to monetize the growth of the smart contract economy, while not needing to overhaul their backend infrastructure or operate mission-critical oracle infrastructure

Chainlink is about flexibility of user choice

6/ The service providers who provision infrastructure is not the Chainlink team as claimed (they don't manage any nodes), but experienced independent service providers, just like the many cloud service providers

This is how most companies provision their infrastructure

7/ These oracle nodes are launched by the data providers, have publicly signaled it's their official node, generate profits from each data request, and have complete control over what service provider provisions the infrastructure (can switch at any time just like cloud services)

8/ In addition, Chainlink also supports DevOps run and owned oracle nodes, which provides a significant advantage with data/service diversity

These nodes are backwards compatible with all the world's data and support advanced oracle services (compute, VRF, Keepers, etc)

9/ API3's approach is to simply limit support for only data delivery from specific entities and push all the complexity onto the (unexperienced) users who becomes responsible for ensuring the nodes have enough crypto for gas and monitoring for downtime

Not a real solution

10/ The advantage of the Chainlink Network is not only its network effect but its unbounded flexibility

The reality is that the vast majority of data providers cannot or do not want to run their own oracle node today

This is because complexity and data privacy

11/ I've covered the complexity aspect but data privacy is just as important

Data providers with proprietary datasets are often unwilling to put their data onto a public immutable ledger where it's seen by all

While API3 has no planned solution, Chainlink is building multiple

12/ DECO (acquired by Chainlink) uses Zero Knowledge Proofs to enable users to definitively prove data came from a specific web server without revealing the data itself

Town Crier (acquired by Chainlink) achieves a similar effect but uses trusted hardware (Intel SGX)

13/ Another solution is Chainlink Authenticated Data Origination (ADO), which was described in the Chainlink 2.0 whitepaper

This is a simplified version of a Chainlink node that allows data providers to easily add cryptographic signing support to their APIs, preventing tampering

14/ Additionally, the ADO allows for the pre-processing of data by the data provider before signing, helping ensure confidentiality

This allows for data queries to turn into true/false results (is the price of Bitcoin higher than $50k), which hides the original query question

15/ Ultimately, data provider run Chainlink nodes and data provider approved Chainlink nodes allow data providers to easily monetize the growth of the smart contract economy today

But as shown, this is just the beginning implementation, but this topic is often oversimplified

16/ The "first party oracle" and "third party oracle" is language that API3 created (among other redefining other terms) to oversimply oracle infrastructure into a false dichotomy of choices

Chainlink supports any type of oracle node, each providing their own unique advantages

17/ Chainlink has never used the "first party oracle" term (you can fact check this), likely because its a phrase that doesn't make sense, data providers launch support for Chainlink

Data providers choose how they deploy their Chainlink node and on which infrastructure

18/ When data providers begin cryptographically signing their APIs (through ADOs or otherwise), the value proposition of API3 becomes more questionable

Even then, data provider run nodes & data provider approved nodes would still be supported on Chainlink for direct monetization

19/ If you consider the latter oracle nodes to be simply "middlemen" to be removed, then you do not understand their value proposition (abstract complexity & lower barrier to entry) or how the data providers themselves are choosing monetize the smart contract economy this way

20/ All decentralized networks that operate at scale are secured by service providers who have intimate knowledge of running mission critical infrastructure

Would you also consider "third party" blockchain miners/validators to also be middlemen that need to be removed?

21/ At the end of the day, users will integrate with the most flexible oracle solution that works for their use cases (this is overwhelming Chainlink) and data providers will support the most flexible oracle solutions that meet their requirements (this is overwhelming Chainlink)

22/ TL;DR I know an API3 shill when I see one, the narratives always play out the same

Usually lacking nuance about how Chainlink actually works & ignoring that everything is driven by what users actually want

Chainlink is the most widely used oracle solution by data providers