The buzz around this week’s token airdrop from Pyth Network, a blockchain oracle firm that competes with Chainlink, has shed light on a long-simmering battle between companies to bring the nascent digital-asset industry’s infrastructure up to the demands of traditional finance.
JPMorgan and Visa stand out as the latest “TradFi” firms to integrate “decentralized ledger” technology and other crypto concepts into their systems.
Oracle services like Chainlink (LINK) have played a key role in spearheading this merger between the old and the new, allowing blockchains to pull in information – mainly price feeds – from crypto exchanges and other real world data sources.
But for the marriage of centralized and decentralized finance to prosper, crypto infrastructure needs to rise to the task – meaning traders need access to the kind of minute-to-minute market data that they’ve grown accustomed to in a world of transcontinental cables and high-frequency price feeds.
That’s where Pyth comes in. Like Chainlink, Pyth is an oracle service – a platform that feeds data to blockchains. But Pyth’s market-focused “real-time data” feeds are significantly faster than Chainlink’s, something that’s supposed to make the service better-tuned to certain financial use cases.
Originally on Solana blockchain
Originally built on the speed-centric Solana (SOL) blockchain and then expanded to become Pythnet, its own Solana-like chain, the project claims on its website that it refreshes its data feeds at 300-400 millisecond intervals. Chainlink’s refresh rate, by contrast, can range from minutes to hours.
Chainlink’s comparatively slow pace comes down to how it sources data, by relying on “decentralized” consortiums of third-party data providers and a network of node operators to report out information. Chainlink’s price feeds refresh at set intervals, or dynamically in response to market volatility (things might speed up soon with new latency-focused updates).
Pyth, by contrast, sources data directly from first-party financial institutions – both traditional and crypto-centric – like Jane Street and Binance. While this institution-driven system carries whiffs of “centralization” – anathema to the disintermediating world of crypto – it brings drastic speed improvements, several orders of magnitude faster than competing services, supposedly in the name of serving the demands of modern finance.
According to Pyth’s documentation, the Pythnet network also aggregates its price measurements from multiple sources. Pyth, on its website, claims to rely on various game theory and cryptography practices to ensure its numbers are reported accurately.
For example, the “bridge” service that Pyth uses to relay data to blockchains, Wormhole, automatically runs certain checks before reporting numbers to blockchains. While these validation services can help protect Pyth’s numbers from tampering, the system can still risk measurement errors if multiple sources report inaccurate numbers.
Pyth kicked off the highly-anticipated airdrop of its PYTH token this week. The new cryptocurrency will double as votes in the protocol’s governance system, meaning the tokens can be “staked” by users who want to weigh in on how Pyth’s tech evolves.
The token, whose supply will be distributed, in part, to around 90,000 crypto wallets that have previously interacted with the protocol, is currently trading at $0.33, down from a height of $0.51.
In addition to jump-starting the market for a new token, protocols frequently use airdrops as a tactic to gain attention and attract users.
The Pyth Network currently ranks as the fourth-largest oracle project, with $1.5 billion in total value secured (TVS), according to DefiLlama. Chainlink has a TVS of $14.7 billion, followed by WINkLink with $7.74 billion and No. 3 Chronicle with $6.72 billion.
But in terms of networks served, Pyth ranks second with 120, just behind Chainlink’s 361.
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