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Bitcoin On-chain Oracle: A Transparent Future for Bitcoin L1 Tokens
September 29, 2023

In the evolving landscape of blockchain technology, one development that has garnered significant attention is the introduction of on-chain oracles (“indexer of indexers”). Spearheading this initiative, ALEX Bitcoin DeFi has recently announced its vision for decentralizing the governance of on-chain oracle.

This approach promises to increase security and transparency, reduce central control, and foster community participation.

A Collaborative Proposal

ALEX’s proposal outlines a comprehensive framework for integrating off-chain indexers with the on-chain indexer. While the proposal touches upon several pivotal areas, three core elements stand out:

Standardization Prerequisites

Establishing uniform guidelines is paramount. By ensuring all indexers adhere to a common set of rules, the system aims to create a harmonious and efficient environment.

Validator Participation Requirements

As the on-chain indexer seeks to uphold the highest data integrity standards, a clear set of criteria has been defined for projects wishing to serve as validators.

Quality Assurance

We will institute rigorous performance monitoring mechanisms to ensure the reliability of the on-chain indexing.

While we work on the framework for a formal governance vote on a proposal like this, ALEX encourages the community to review, discuss, and offer constructive feedback. Such a collaborative approach will refine the proposal and ensure it aligns with the broader community’s needs and aspirations.

Laying the Groundwork

The founding members, including esteemed names like Domo, ALEX, BIS, Hiro, OKX, and UniSat, are committed to building a robust foundation.

Two significant steps in this direction are:

  • Releasing standard, open-sourced indexing rules that will guide the indexing process.
  • Providing a standard, open-sourced reference implementation of these rules ensures that all participants clearly understand the system’s workings.

Joining the Indexing Revolution: Validator Requirements

Becoming a validator for the on-chain indexer is open to everyone, provided projects meet the following requirements:

  • The indexer implementation must be open-sourced, promoting a culture of transparency and collaboration.
  • Projects must have a proven track record, with an operating history of at least three months, ensuring reliability.
  • The indexer’s implementation should be peer-reviewed and gain approval from at least two existing validators, maintaining the ecosystem’s quality.
  • Validators are expected to integrate seamlessly with the on-chain indexer, adhering to the guidelines available here.

Upholding Excellence: Performance Monitoring

A dedicated dashboard will be instituted to ensure the on-chain indexer’s continuous high performance.

This real-time monitoring tool will provide insights into each validator’s performance metrics, such as freshness, accuracy, latency, and availability. Validators falling short of the expected standards will be granted a grace period to improve.

Persistent underperformance might result in removal, ensuring the on-chain indexer remains efficient and reliable.

In Conclusion

The move towards a decentralized, community-led on-chain indexing system represents a significant leap in the blockchain domain, especially for meta-protocols like BRC20.

By setting clear guidelines, fostering community involvement, and emphasizing transparency, ALEX and its partners are paving the way for a more inclusive and efficient future in the realm of on-chain indexing.