How Pyth Oracle Seizes Market Opportunities: High Performance and Multi-chain Support

Author: Rui Source: X, @YeruiZhang

In the field of Crypto, the middleware track has attracted widespread attention in recent years. Since the rapid rise of Chainlink and The Graph in 2021, many venture investors have begun to chase this field, especially on topics such as safer bridges (ZK bridge), cheaper oracles (multi-chain + low-cost deployment), and more effective on-chain data (real-time + high-quality data), believing that these will be the next big innovation at the public chain level.

Market power

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

However, the market's enthusiasm for these areas is not always accompanied by success. Driven by optimism, many investors and entrepreneurs may ignore potential risks. As I mentioned in my tweet in early September, many middleware projects are actually deceiving themselves. A few rely on airdrop incentives to maintain superficial prosperity, while most projects face the dilemma of lack of practical applications.

Against this background, Pyth, as a prominent representative among a number of "king-level" projects, has gradually won market share through differentiated competition. Pyth's success can be attributed to two aspects.

First, Pyth continues to deepen its roots in familiar fields and focuses on providing high-performance, low-latency and low-cost oracle services. Its rich and high-quality data sources have attracted a number of exchanges (such as Perp DEX) to cooperate. In addition, relying on Wormhole's multi-chain support, Pyth effectively expands horizontally to heterogeneous chains. Despite its low market share on Ethereum and Layer 2, Pyth's number of requests has risen with the rapid growth of DeFi on SUI and APT chains this year.

Secondly, Pyth has performed well in seizing market opportunities. By leveraging the expected airdrop of Staking, it successfully seized the asset issuance opportunity of Wormhole in the governance pledge in January this year, triggering short-term Fomo in the market and increasing the Staking rate. Compared with other oracles, Pyth is particularly fast in connecting to new chains, and it is expected to continue to seize opportunities in the next batch of heterogeneous chain issuances.

The launch of OIS and network security

In addition to conventional governance pledges, Pyth recently launched security pledges (OIS), further strengthening its internal strength. OIS introduces a stronger data source responsibility mechanism in the form of pledges, linking the tokens of pledgers to data publishers. This not only provides protection for stakers, but also incentivizes data publishers to expand the number of supported assets, ensure the security and effectiveness of the oracle, and avoid being slashed.

In addition, Pyth plans to provide 100 million tokens as rewards, which will effectively improve the security of the entire network and the pledge rate of tokens.

Solana's Potential and Challenges

In this cycle, Solana has shown the strongest potential to go out of the circle. Pyth has been committed to adapting a variety of and low-latency data sources since Day 1 to support Solana's expansion vision. Although Pyth has occupied a considerable market share, it still faces challenges in data quality, which may lead to potential attack risks. At the same time, the lack of on-chain revenue models has also affected the stability of APY for Staking users.

The introduction of OIS effectively ensures the security and quality of data through the pledge mechanism. The additional pledge income provides users with the motivation to pledge long-term, and opens the way for subsidies through additional tokens, showing an interesting attempt.

Conclusion

Overall, the Crypto middleware track is full of opportunities and challenges. Although many projects face difficulties in practical applications, the success of Pyth shows that under the strategy of balancing innovation and security, it is still possible to stand out from the competition. With the development of the market, how to achieve scale while ensuring quality will be the focus of future middleware projects.