Pyth Network aims to provide robust support for DeFi applications and bridge the gap between traditional finance and on-chain finance. The launch of the Pyth Price Feeds in 2021 marked a significant step toward this mission. As DeFi continues to expand, the needs of developers and users are evolving. There is a more urgent demand than ever for the security and reliability of Web3 capital markets.

The introduction of Oracle Integrity Staking is an innovation of the Pyth Price Feeds, enhancing accountability for data sources through a decentralized staking reward and penalty mechanism, thereby creating a safer DeFi ecosystem.

• Pyth publishers (data providers) will automatically earn rewards through the Pyth protocol for maintaining high-quality data contributions. Conversely, if they provide erroneous data that negatively impacts the protocol, their staked funds will be slashed. The Pyth DAO can vote on how to allocate these slashed funds, such as distributing them to affected users or using them for other purposes.
• PYTH stakers can delegate their stakes to Pyth publishers, thereby increasing the potential rewards earned by publishers for providing high-quality data. This action helps to strengthen the resilience and security of the Pyth Price Feeds; in return, PYTH stakers will also automatically earn rewards for contributing to the protection of the oracle network and DeFi security.

Oracle Integrity Staking encompasses over 500 Pyth Price Feeds, setting a higher standard for integrating oracle technology and market participants into the DeFi ecosystem. This release is a crucial milestone for Pyth Network in its mission to provide reliable and accurate price data for all blockchains, while also addressing the growing demands for decentralization and sustainability.

This article will explore how Oracle Integrity Staking enhances data accountability and the security of price feeds, enabling developers to build applications with confidence.

The Transformation Brought by Oracle Integrity Staking for Developers

In the field of Oracle services, the most pressing challenge today is how to provide high-quality and reliable price data in a trustless manner, covering all assets and blockchains required by developers.

Currently, the data infrastructure available to developers has no comprehensive accountability mechanisms to ensure data quality. Existing oracles only offer on-chain quality control incentives for relatively secure market segments.

At the same time, expanding asset coverage remains a complex challenge for push-based oracles. While Pyth’s pull-based oracles have set a new standard for quickly expanding price feeds to new chains, applications using Pyth can still benefit from accessing new, trending, or strategic assets that are not yet popular.

Oracle Integrity Staking directly addresses the issues of data quality and scalability by making Pyth publishers financially responsible for the accuracy of prices and asset coverage.

Price Accuracy

Publishers must stake PYTH tokens to qualify for on-chain rewards, and they will only receive rewards automatically if they provide high-quality price data. Conversely, if publishers provide erroneous or malicious data, part of their stake will be slashed as a penalty. Additionally, the Pyth DAO can vote on how to handle the slashed funds, including distributing part or all of them to users affected by the erroneous data or using the funds to support other purposes within the Pyth Network.

For developers, these outcomes lead to greater trust in data, allowing them to build with confidence, free from concerns about data integrity and security. These safeguards complement Pyth’s existing reliable practices, such as on-chain aggregation to exclude anomalous data inputs and consistency testing for newly launched oracles.

Asset Coverage

Oracle Integrity Staking also allows publishers to increase their potential rewards by supporting more symbols (price feeds). Furthermore, if publishers begin to provide data for less popular symbols, rather than for well-supported, high-liquidity trading pairs, their potential rewards will increase further.

This incentive mechanism positions Pyth as a leading choice for smart contract developers when building diverse applications. Regardless of where development teams choose to build or what type of asset data they require, Pyth’s price feeds can scale to meet these needs.

Protecting the DeFi You Know and Love

The Pyth community plays a crucial role in Oracle Integrity Staking, as PYTH stakers now earn rewards automatically by helping to enhance the security of the oracle network. Stakers bolster the potential rewards for Pyth publishers by delegating their stakes to them, thereby strengthening the resilience and accuracy of the Pyth price oracle. The staking reward mechanism first allocates rewards to publishers based on data quality, and then distributes rewards to stakers, recognizing their contributions to the network.

This mechanism provides stakers with a unique way to guide publishers in supporting more symbols and asset types, while ensuring high standards for data quality. It is important to note that the rewards and penalties of Oracle Integrity Staking affect not only the publishers but also their supporting stakers. Publishers are responsible for the data they provide to the oracle, while stakers help reinforce the oracle network by choosing which publishers to support.

How Oracle Integrity Staking Works

Oracle Integrity Staking allows anyone to participate in protecting Pyth and maintaining the security of the DeFi ecosystem. The program introduces a decentralized staking reward and penalty mechanism to incentivize publishers and PYTH holders to stake tokens, thereby enhancing the integrity of the oracle.

Staking Rewards and Penalties

At the core of Oracle Integrity Staking is the staking pool, with each pool corresponding to a different publisher. Each participating publisher can stake PYTH tokens to earn performance rewards based on the quality of their published data. PYTH stakers — members of the Pyth community — choose which publishers they want to support and can stake PYTH tokens into any publisher’s staking pool, helping to protect the oracle network.

The total amount of rewards generated by a staking pool depends on the total number of tokens staked in that pool (including the amount that publisher and staker stake). As the total stake increases, the amount of rewards also increases, up to a limit known as the staking cap. Publishers can raise their staking cap by supporting more symbols. Conversely, stakers can incentivize publishers to support more symbols by choosing to stake with those publishers who support more ecosystem-relevant symbols. Rewards are automatically distributed between publishers and stakers, with rewards first allocated to publishers and the remaining portion distributed to stakers.

The Pyth DAO sets an annual maximum reward rate for staking pools to balance sustainability and effective participation. Currently, this reward rate is set at 10%, but it can be adjusted by the Pyth DAO. The maximum reward rate is reached when the total staking amount in the pool is below the staking cap. However, the total reward amount cannot exceed the maximum reward rate multiplied by the staking cap. This means that if the staking amount exceeds the cap, stakers will receive a lower reward rate.

This arrangement incentivizes stakers to carefully evaluate the full list of publishers in the network when deciding where to stake, helping to protect the oracle network. For more details on reward calculations, please refer to the relevant documentation.

In summary, the rewards for Oracle Integrity Staking are determined by several key factors, which can be adjusted by the Pyth DAO:

• Staking Cap: This is the maximum amount of tokens that can be staked with a publisher (including both the publisher’s own and additional stakers) and qualify for rewards. A higher staking cap allows publishers to attract more stakers and increases the nominal rewards of the staking pool.
• Number of Symbols Supported by the Publisher: Publishers can increase their staking cap by supporting more symbols, leading to higher potential rewards. These additional rewards compensate for the risks associated with supporting more symbols.
• Maximum Reward Rate: The DAO sets the highest reward rate that can be earned in a staking pool, calculated as an annual percentage yield (APY). While a higher maximum reward rate can enhance the total earnings potential for participants, the DAO must manage this parameter carefully to balance incentives for participation with the long-term sustainability of Oracle Integrity Staking and the Pyth Network.
• Delegate Fee: Publishers charge stakers in the pool a fixed percentage of the rewards (currently 20%) as a delegate fee, which is deducted from the net rewards after any penalties. The DAO can vote to adjust this fee rate and structure.
• Penalty Mechanism: If the data provided by a group of publishers fails to meet the standards, both the publishers and their supporting stakers may face penalties. This shared responsibility model encourages stakers to carefully evaluate publishers and promotes a culture of accountability across the network. Currently, the penalty cap is set at 5% of the total staked amount, but this percentage can be adjusted by the Pyth DAO. The DAO can also vote on how to use the penalized tokens, including whether to allocate them to users affected by erroneous data or to support other initiatives for the Pyth Network.

How Stakers Can Participate

PYTH stakers play a crucial role in Oracle Integrity Staking by staking tokens with publishers to enhance the security and data integrity of the oracle network.

To get started, anyone holding unlocked PYTH tokens can access the Pyth Staking Dashboard and navigate to the Oracle Integrity Staking program. Eligible participants* can begin exploring the list of publishers, select the ones they wish to support, and help ensure the security of the oracle network.

Stakers can rank and evaluate publishers based on factors such as pool composition, publisher quality ratings, the number of price feeds supported by the publisher, or any other criteria they consider important. Once ready, stakers can stake tokens into any publisher’s staking pool. These tokens will enter a warmup period before they are officially staked and contribute to securing the oracle network. Stakers can manage their staking allocation among different publishers based on personal preferences and strategies for maintaining the oracle network’s integrity.

Tokens staked to Pyth governance by PYTH holders will be visible in the Oracle Integrity Staking program, allowing them to be staked directly with publishers without needing to withdraw them first to their wallets.

Finally, participants can choose to stake the same tokens in both the Oracle Integrity Staking program and the Pyth Governance program, thereby ensuring oracle security while also gaining voting rights on Pyth Improvement Proposals. Participants can also choose to stake only in Pyth Governance without participating in Oracle Integrity Staking.

The Role of Pyth DAO

Pyth DAO is responsible for setting parameters for managing Oracle Integrity Staking, such as the staking cap, delegation fees, and penalty amounts, ensuring that the incentive mechanisms align with maintaining high data standards. Current parameter settings can be found in the documentation.

Pyth DAO also oversees important updates to the staking and penalty mechanisms, such as deciding the sources of rewards for publishers and stakers. To launch this program, the Pyth Data Association has allocated 100 million unlocked tokens. Pyth DAO can vote on additional sources of rewards, such as on-chain revenue generated by Pyth oracles.

Additionally, Pyth DAO can vote on how to handle tokens penalized due to publisher data errors. Although penalized tokens automatically return to the DAO vault, Pyth DAO can vote to distribute these tokens to parties affected by data errors or use them for other DAO-approved purposes.

The DAO can also modify the reward structure, such as incorporating additional digital assets as rewards, allowing for broader staking participation and further enhancing oracle security and coverage.

Through these responsibilities, Pyth DAO empowers the community to shape the future of Oracle Integrity Staking, ensuring the continued resilience and scalability of the Pyth Network.

Price Feeds V3 and Future Developments

In decentralized finance (DeFi), the reliability and accuracy of oracle data are crucial. As more funds flow into the blockchain ecosystem, the risk of inaccurate or manipulated data increases.

While the existing reliability measures of Pyth price feeds are essential for maintaining current DeFi operations, the evolving DeFi landscape requires more advanced security mechanisms. Therefore, leveraging cryptoeconomic safeguards for price data security is a logical next step for price feeds.

Pyth Network initially launched Price Feeds V1 on Solana, providing high-frequency on-chain data from first-party sources. With Solana’s speed, Pyth set new standards for reliable data delivery. With the launch of Price Feeds V2, Pyth became the first pull-based oracle, expanding its impact to multiple blockchain ecosystems including EVM, Move, Cosmos, and Bitcoin, delivering high-quality, low-latency price data to developers across any chain.

Oracle Integrity Staking unlocks Price Feeds V3, a significant advancement in Pyth price feeds, introducing accountability mechanisms for each data source. The core component of V3 is Oracle Integrity Staking, which allows Web3 developers to build with confidence, knowing that data inaccuracies or malicious tampering are addressed.

Oracle Integrity Staking introduces a new paradigm in the Oracle space, proactively prioritizing the accountability of data sources and protecting the entire data supply chain, setting higher industry standards for price feeds.

To date, Pyth Network is the only data infrastructure solution providing this level of data accountability and security, covering all existing price feeds from the most frequently used to the low-liquidity long-tail assets. Oracle Integrity Staking ensures each price feed is secure, every user is protected, and every publisher is accountable.

Pyth Network is redefining the future of DeFi. Whether you come from any ecosystem or choose how to contribute, you are welcome to join this transformative journey and make history together.

Disclaimer：

1. This article is reprinted from [Medium]. All copyrights belong to the original author [Penny Lu]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
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