Author: Rui Source: X, @YeruiZhang

In the crypto field, the middleware track has attracted widespread follow in recent years. Since 2021, Chainlink and The Graph have risen rapidly, and many venture capitalists have begun to chase this area, especially in the themes of more secure ZK bridge, cheaper Oracle Machine (multi-chain + low-cost deployment), and more efficient on-chain data (real-time + high-quality data), believing that these will be the next major innovation at the public chain level.

Market Dynamics

There are two main reasons behind this phenomenon. First, dissatisfaction with existing solutions in the market has prompted innovation. Many developers believe that current tools are not perfect enough, so they choose to enter the middleware market for improvement. Second, the top projects in these tracks have high potential in market valuation (FDV), attracting a large amount of capital injection, believing that the market space is huge.

However, the market's enthusiasm for these areas is not always accompanied by success. Many investors and entrepreneurs, driven by optimism, may overlook potential risks. As I mentioned in a tweet in early September, many middleware projects are actually deceiving themselves, relying on Airdrop incentives to maintain superficial prosperity, and most projects are facing the dilemma of lack of practical application.

In this context, PYTH, as a prominent representative among the "king-level" projects, has gradually won market share through differentiated competition. The success of PYTH can be attributed to two aspects.

First of all, Pyth continues to delve into familiar fields, focusing on providing high-performance, low-latency, and cost-effective Oracle Machine services. Its diverse and high-quality data sources have attracted collaborations with exchanges like Perp DEX. In addition, leveraging the multi-chain support of Wormhole, Pyth has effectively expanded to heterogeneous chains. Although its market share on Ethereum and Layer 2 is relatively low, the number of Pyth's requests has also risen rapidly along with the rapid rise of SUI and APT on-chain Decentralized Finance this year.

Secondly, Pyth has performed well in seizing market opportunities. Leveraging the expected Airdrop through Staking, it successfully captured the asset issuance opportunity of Wormhole in the governance stake in January this year, triggering short-term FOMO in the market and increasing the Staking ratio. Compared to other Oracle Machines, Pyth appears particularly fast in integrating new chains and is expected to continue seizing opportunities in the issuance of the next batch of heterogeneous chains.

The Launch of OIS and Network Security

In addition to regular governance stake, PYTH recently introduced OIS (security stake), further strengthening its internal strength. OIS introduces a stronger data source responsibility mechanism in the form of stake, linking the stakeholder's tokens to the data publisher. This not only provides assurance to the stakers but also incentivizes data publishers to expand the supported assets, ensuring the security and effectiveness of the Oracle Machine and avoiding being Slashed.

In addition, Pyth plans to provide 100 million Tokens as rewards, which will effectively enhance the security of the entire network and the loan-to-value of Tokens.

The Potential and Challenges of Solana

In this cycle, Solana has shown the strongest potential for breakout. Since Day 1, PYTH has been committed to adapting to a variety of low-latency data sources to support Solana's expansion vision. Despite occupying a considerable market share, PYTH still faces challenges in data quality, which may lead to potential attack risks. At the same time, the lack of an on-chain revenue model also affects the stability of Staking users' APY.

The introduction of OIS effectively ensures the security and quality of data through the stake mechanism, and the additional stake income provides users with a long-term stake motivation, as well as opening up a subsidy path through additional Tokens, demonstrating an interesting attempt.

Conclusion

Overall, the Crypto middleware track is full of opportunities and challenges. Although many projects are facing the dilemma of practical application, the success of PYTH demonstrates that it is still possible to stand out in the competition with a strategy that emphasizes innovation and security. As the market develops, how to achieve scalability while ensuring quality will be the key direction that future middleware projects need to follow.