In a post, Vitalik Buterin proposed to utilize decentralized exchange (DEX) Uniswap for additional oracle functionality. The UNI token currently already provides oracle data, but only for the price of ERC-20 tokens.

Data outside of the Ethereum ecosystem, especially for USD, currently falls short. Based on Uniswap’s privileged position, Buterin suggests UNI is well poised to integrate a fuller complement of oracle services.

“This is a problem: algorithmic stablecoins need an oracle for the price of ETH/USD to be able to function, and they specifically need an oracle for USD the off-chain fiat asset, and not any specific on-chain instantiation of USD.”

The response to this proposal has been largely favorable. But given Uniswap’s stuttering V3 launch, questions arise whether the team can pull off such an integration.

Oracles act as a bridge between blockchains and the outside world by providing data to smart contracts. For smart contracts to execute as intended, they require that link to the outside world.

Buterin described the leading oracle, Chainlink, as useful. But he conceded that several drawbacks come from its broad approach to the oracle problem. He argued that, in this case, he prefers a less complex solution:

“It also seems desirable to complement Chainlink with a more minimalist alternative that’s more laser-focused on optimizing incentives and maximizing cost of attack.”

Making the cost of an attack prohibitively expensive is a strategy used to protect the network. As such, Buterin points out that large market cap tokens, like Uniswap, are favored as the cost of buying half the UNI market cap is high.

After a year in the making, Uniswap V3 deployed earlier this month. It added concentrated liquidity, capital efficiency, active liquidity, range orders, non-fungible liquidity, flexible fees, and a license to use its open-source code.

However, users reported wallet connection difficulties on the day of launch. The issue seemed to affect a wide range of different wallets from MetaMask, to Coinbase, to hardware wallets.

One Reddit user also mentioned the complex UI, which they see as a contributory factor in novice users falling prey to scammers.

“Great work by the Uniswap guys, but it’s 2021 and we (the crypto community) have got to find a way to roll these things out in a beginner friendly way so people don’t get completely ripped off.”

Perhaps the most significant bone of contention was gas fees. Developers assured users of a reduction in gas fees, but one user points out they are up an average of 102% compared to V2.

Buterin has given his reasons for expanding UniSwap’s capabilities. But in truth, UNI still has to refine its bread and butter functionality.

The post Ethereum’s Vitalik Buterin makes the case for Uniswap as an oracle token appeared first on CryptoSlate.

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