Ethereum Co-founder Proposes Uniswap’s UNI to be Used as an Oracle Token

While “Chainlink is great,” Vitalik Buterin says, “there’s room for a simple alternative specialized for high-value, okay-with-high-latency use cases.”


Vitalik Buterin, the co-founder of Ethereum, posted a new proposal on the Uniswap forum. He recommends the popular DEX and its native UNI token step in to provide a highly secure oracle modeled after the Augur or UMA design.

Such an oracle will be “specialized to providing price data that’s robust and extremely costly to manipulate and attack,” he wrote.

The proposal called “UNI should become an oracle token” says a highly secure price oracle is one of the most important pieces of a successful decentralized finance (DeFi) ecosystem as everything from algorithmic stablecoin to synthetic assets and collateralized loan depend on a price oracle.

While Uniswap already provides an “oracle” for the price of ERC20s traded on the exchange, it does not do so for anything in the outside world.

Buterin says stablecoins need an oracle for the price of ETH/USD, but workarounds like taking the ETH/USDC price are not sufficient.

“UNI is in an excellent position to be a token for such an oracle,” he said. “More broadly, Ethereum L1 needs to remain governance-minimalist, but L2 should be more ambitious, and UNI can be part of that.” Jason Choi of crypto fund The Spartan Group noted,

“Tl;dr minority voters are penalized, majority rewarded, not dissimilar to a prediction market. Interesting that only a high-value token can make this work – i.e., price is a feature, not a distraction.”

As for why Chainlink hasn't been considered for the same as wondered by Fiskantes of Zee Prime Capital as well,

“Why not implement this design into Chainlink, which is the second biggest?

Buterin says while Chainlink is great, there’s room for a simple alternative that is specialized for high-value and high-latency use cases. ChainLinkGod, the Community Ambassador of Chainlink explained,

“Chainlink 2.0 introduces a cryptoeconomic model extremely similar to this with two-tier oracle networks where the first tier explicitly stakes tokens and the second tier consists of the nodes with the greatest financial exposure to LINK and the most skin in the game to lose.”

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