openOracle is a trust-minimized price oracle using a limit order game that resolves into a good price.

The goal is to replace the current set of centralized and trusted oracle intermediaries for on-chain token prices so DeFi applications can have fewer points of failure.

The oracle problem is a long-running issue in DeFi where it is difficult to ensure the cost of corrupting some oracle is greater than the profit from corruption.

We solve the problem using a limit order game:

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 in a certain amount of time (the settlement time), it is evidence of a good price that can be used for settlement. If an order is taken, the taker needs to post more collateral in both tokens, imply a price, the timer restarts, and the rules are the same.

The oracle uses exponential collateral escalation during disputes to increase the cost of manipulation and give users some statistical guarantees around total time to settlement and cost to delay. In the average case, the capital required to report accurate prices can be much lower than the notional amount settled by the reported price.

0