We are thrilled to announce Pyth Network as an early integration partner.

Integrating Pyth Price Feeds ensures our users receive the most reliable and up-to-date market data.

Our decision to partner with Pyth was driven by its exceptional advantages, including rapid updates and low latency, ensuring that our users always have the latest price information. Additionally, Pyth’s extensive asset coverage spans over 70 markets on Polynomial. This collaboration has been transformative, enabling us to handle billions in trading volume and support thousands of traders. Pyth’s adaptable price feeds have seamlessly scaled with us, enhancing our platform's reliability and user experience. With Pyth's real-time data and smart contract integrations, we have expanded our asset offerings, improved live price charts, and achieved precise PnL calculations, making our platform more intuitive and efficient for our users.

Why do we need Oracles?

A blockchain oracle acts as a bridge between blockchains and the external world, enabling smart contracts to use off-chain data in their operations.

Typically, oracles are third-party services that collect, verify, and relay external information to smart contracts on the blockchain. They enhance the capabilities of smart contracts by providing access to off-chain data, allowing them to perform a wide range of tasks and services. Without oracles, smart contracts would be limited to on-chain data and unable to interact with external information.

Oracles serve as a bridge between the external world and the world of smart contracts

It's important to understand that oracles are intermediaries, not original data sources. They retrieve, verify, and transmit external data to smart contracts, supplying various types of information such as price data, payment confirmations, and sensor readings.

Moreover, oracles must maintain the trustlessness and decentralization inherent to smart contracts while transmitting this data. This challenge, known as the oracle problem, involves ensuring the reliability, authenticity, and trustworthiness of off-chain data provided to smart contracts while avoiding single points of failure and centralization.

What is Pyth?

Pyth operates as an oracle network catering to diverse blockchains, protocols, and projects within the Web3 and broader cryptocurrency sector. Oracles serve as a conduit for blockchains and protocols to access data existing off-chain. For instance, while Solana can calculate the balance of SOL tokens in each account, it cannot compute the price of a SOL token, which relies on off-chain inputs like pricing data from centralized exchanges (CEXs).

Pyth's flagship product, Price Feeds, delivers nearly real-time pricing data for various assets, encompassing cryptocurrencies, commodities, and stocks. These price feeds empower third-party applications, such as lending protocols, to integrate pricing data crucial for smooth operations. In the context of a lending protocol, erroneous or faulty pricing data could accumulate bad debt and losses for the protocol's liquidity providers (LPs).

How it works

The Pyth Network enables market participants to publish pricing data on-chain for applications to utilize. The protocol functions through the following interactions:

• Data providers submit pricing information to Pyth's oracle program. To enhance accuracy and robustness, Pyth employs multiple data publishers for each product.

• The Pyth protocol aggregates the data from these providers to generate a single combined price and confidence interval.

• Data users access the price information produced by the oracle program.

The Incentive structure and protocol design

It's important to note that the Pyth Network itself is not a data source. Instead, data providers supply data to the network, and data users seek this data. Acting as a decentralized marketplace, the Pyth protocol aggregates data from providers and prepares it for use by applications across various blockchains.

Pull, Don’t Push

The Pyth Network has introduced Pyth Price Feeds (also known as Pythnet Price Feeds), a new, highly accurate, and scalable price oracle. This oracle utilizes a new on-demand or pull-based price update model, which addresses key cost issues that have hindered the performance of previous designs.

While most applications rely on a push oracle for price updates - where the oracle operator or other privileged entities continuously push updates to each blockchain - Pyth's pull oracle allows users to pull prices on-chain only when necessary.

This pull oracle design enhances existing oracles by removing transaction costs for the oracle and data providers, enabling Pyth to scale more effectively than traditional push oracles. As a result, Pythnet Price Feeds can support high-frequency price updates for thousands of feeds across an unlimited number of blockchains. These price feeds are secure, highly available, and provide accurate tracking of asset prices on both centralized and decentralized exchanges with ultra-low latency.

Pythnet Price Feeds allow users to pull prices on-chain only when they are needed.

So, why do we choose Pyth?

Multichain Availability

With traditional “push” oracles, each new price feed on each individual chain is its own separate deployment, and getting data on one chain about an asset on another network is more or less not possible at scale as a result.

The Pyth Network's price feeds are accessible on all Pyth-supported blockchains by default since price sourcing and aggregation occur on Pythnet, and the price updates are brought cross-chain through Wormhole. When a new Pyth Price Feed launches, it is immediately available on all supported blockchains, eliminating the need for individual deployments on each target chain. This makes Pyth an interesting oracle for launching new data feeds, as Pyth can instantly expand price exposure for an asset to dozens of blockchains.

Pyth’s on-demand model allows for new price feeds to be onboarded constantly and across countless support networks

Suppose a new asset emerges on platforms like Optimism and gains traction, with demand for it to be utilized as collateral and for borrowing purposes. In that case, Pyth can swiftly establish a data feed for it. As there are no on-chain obligations, the price feed can be promptly established off-chain at a minimal cost, with the responsibility lying on Pike to retrieve this data as required and pay accordingly.

Low Latency, High - Frequency Updates

As Pyth streams its price feed data off-chain, it isn't constrained by block time, transaction fees, or confirmations associated with on-chain data hosting. Push-based Oracle providers often limit update frequency or support only a few assets and chains due to the high costs of transacting on certain chains.

In contrast, Pyth updates each Pyth Price Feed multiple times per second. The data is streamed to Wormhole, and users can access it through a public API. Pushing every price on-chain would render frequent updates like this impractical. Push oracles typically update less frequently than block time due to the high costs of more frequent updates.

Furthermore, Pythnet streams price updates at a high frequency off-chain, enabling decentralized applications to utilize the most recent off-chain prices for every transaction. This approach yields fresher prices compared to relying on the last on-chain update pushed by an oracle.

This capability ensures that Henez Finance always has access to highly accurate price data, bolstering user confidence in managing liquidations, assessing outstanding debt health factors, and calculating loan-to-value ratios.

Reliability

Continuing from the benefit of having low latency, often networks can become congested and because push-based oracles are always pushing their data on-chain by design, it runs the risk of transactions failing (in a worst-case scenario) or paying unavoidably high transaction fees. This can result in slow to update price feeds, which can mean outdated data, compounded further by market volatility, and reduces their reliability - often when needed most.

On the other hand, Pyth’s off-chain updates are inherently not affected by blockchain congestion and better yet, as the user, you can choose specifically when to pay the higher gas fees, and to what degree. Furthermore, you’re able to automate a lot of these based on rules, whether it be to minimize expenditure on fees or predetermine how often you’ll take a new price depending on set variables.

One more thing

Henez Finance is a cutting-edge decentralized protocol designed to be the first Omnichain Layer to unlock the liquidity of trillions of idle assets on both EVM & non-EVM chains.

Keep an eye out for an upcoming announcement that will provide information about the campaign in the weeks ahead.

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