Pyth network in simple terms is a blockchain-based Oracle Solution that provides real-world data to smart contracts. In this Learn article for Cryptoclock we are going to look at what the Pyth Network is all about and the role it plays in the advancement of the crypto space.
Oracle Solutions like Pyth Network were designed to solve the Insular nature of Blockchains that are usually designed to be cut off from the real world to maintain their credibility and the accuracy of the data they give.
The insular nature of Blockchains poses a real challenge to the spread and adoption of blockchain technology in a world that is increasingly becoming connected. Pyth Network was created to solve the issue by bridging the gap between closed Blockchain systems and data from the real world.
Third-party systems like Pyth were created to facilitate the transfer of accurate data to and from Smart contracts hence solving the challenge posed by the insular nature of blockchains.
History
The Concept of Blockchain Oracles to bridge the real world and blockchains were birthed long before the launch of Pyth Network. Other Blockchain Oracles like Augur (a decentralized prediction market conceived in 2014) and Oraclize (which later rebranded to Provable Things) existed before the launch of Pyth Network.
Another good example is Chainlink which became a reliable source for price feeds for Decentralized Finance Protocols.
Pyth Network was launched in 2021 and was originally designed as an Oracle for the Solana Blockchain. The Network since then has become a multi-chain solution for providing pricing data to the DeFi space. Pyth Network data comes from financial institutions differentiating it from other oracles like Chainlink that get their Data from node operators.
Pyth Network was developed in an incubator program run by Jump Crypto, an arm of Jump Crypto Group, a large trading firm based in Chicago. The creation of the network helped foster cooperation between the traditional finance world which Pyth Network relies on to get its data for smart contracts.
PYTH Network’s Mechanism
Pyth network is a highly effective oracle system designed to tirelessly provide accurate asset pricing data to on-chain defi protocols. Asset pricing data includes prices of crypto assets like Bitcoin and Ethereum or the price of non-crypto assets like equities.
The network aims to provide accurate data for its end users which are smart contracts and crypto traders
At the core of Pyth Network’s mechanism is a two-participant system that comprises consumers and publishers.
The Consumers are users of smart contracts that pull from Pyth’s pricing feeds, and they are charged a flat rate per request while Publishers are market participants like trading companies, exchanges, and other financial institutions who provide price data to the network and collect fees from consumers for this service.
The Publishers run a validator on a Proof of Authority (PoA) network. The Pythnet network aggregates prices from all publishers, so each asset it lists has one reference price. These aggregated prices are then broadcasted across blockchains through pre-existing cross-chain messaging protocols to on-chain contracts facilitating the distribution of Pyth’s data to several users on any number of networks.
PYTH’s Token
The native token of the PYTH network is known as PYTH and it is used for a couple of things including governance.
Pyth Network’s community members can obtain PYTH tokens to participate in votes that direct Pyth’s development. Tasks like this include setting fees, guiding rewards for data publishers, approving updates, and defining how assets are listed on the network.
Tokenomics
The PYTH network has a maximum total supply of 10 billion PYTH. The token for the network was initially launched in November 2023 and saw 1.5 million PYTH entering the circulating supply.
The launch followed an airdrop in which 90,000 wallets received 255 million PYTH.
Pyth Tokens were set to be unlocked at 6- to 12-month intervals over the course of 3.5 years (ending in 2027).
The distribution of Pyth token total supply is interesting. 52% of the Total supply was allocated to ecosystem growth, 22% to publisher rewards, 10% each to protocol development and private sales, and 6% directly to the community and through the initial launch.
Conclusion
Pyth Network bridges the world of smart contracts and blockchains with that of Traditional finance by facilitating the sharing of data between the two entities.
The Pyth Network at its core provides real-world pricing data for crypto and non-crypto assets to blockchain-based smart contracts. The Pyth network serves as an important resource promoting the collaboration between Traditional Finance and Cryptocurrency providing a win-win situation for both entities and end users.
For more information visit the project’s official Telegram channel and Website
Image Credit: Coin Market Cap