Oracle++

Oracle++

In our DLC-based lending system, an oracle must cryptographically sign periodic event attestations to enable automated liquidations of BTC collateral when necessary. Oracle++ is Side Protocol’s decentralized oracle system designed to fulfill this requirement through two core components:

Data Provider Network (DPN)

The primary participants in the Data Provider Network (DPN) are Side Chain validators, who perform two key functions. First, they synchronize Bitcoin block headers by implementing a voting power–weighted majority decision mechanism, requiring consensus from validators representing at least two-thirds of total network voting power. This ensures accurate and consistent tracking of Bitcoin block heights. Second, they provide aggregated price feeds by sourcing data from major cryptocurrency exchanges and computing a weighted average price based on validator voting power, thereby improving reliability and mitigating manipulation risk. These off-chain data inputs are submitted via Cosmos Vote Extensions [8], which offer a robust framework for incorporating off-chain data into on-chain consensus using ABCI++ enhancements.

Event Signer Network (ESN)

Complementing the Data Provider Network is the Event Signer Network (ESN), which is specifically designed to support DLCs. Oracle++ introduces a robust security architecture that minimizes reliance on any single oracle. At its core is the FROST scheme, which enables threshold-optimized Schnorr signatures and provides Byzantine fault tolerance with a 15-of-21 signing threshold. The 21 participants are randomly selected from the top 50 active validators.

Unlike traditional DLC oracles that rely on fixed public keys, Oracle++ uses Distributed Key Generation (DKG) to produce two ephemeral keypairs for each event: one for the one-time oracle signing key, and one for the nonce. The private keys are never known by any individual; instead, they are secret-shared among 21 participants, each holding one share. These keys are used to collectively sign the event attestation. DLC participants use the adaptor point to construct the CET signature, which can later be completed upon receiving the corresponding attestation signature.

This design ensures that only actively participating validators are involved in key generation, while maintaining fault tolerance by allowing up to one-third of signers to be offline during attestation.

Event Announcement

Price Event: Price events represent continuous numerical outcomes, such as BTC/USD prices, which cannot be discretely enumerated. To handle this, the system employs Numeric Outcome Compression, a mechanism that maps price values into fixed-length intervals. For example, with a compression length of 100, the price map would include ranges such as (0, [0,100)), (100, [100,200)), …, (99900, [99900,100000)), where each entry defines a valid range for price resolution. Upon finalizing a price attestation, the system automatically generates a new price event for the next monitoring interval, ensuring continuous and timely tracking of market data.

Date Event: ESN maintains a 365-day rolling event calendar aligned with maximum loan tenures. The oracle executes automated daily updates to advance the coverage window, ensuring continuous temporal attestation availability.

Loan Event: Initialized during loan origination, repayment-triggered events create cryptographic proof bindings between mainchain DLCs and Side Chain states. This mechanism enables non-custodial collateral redemption without DCM coordination.

Event Attestation

Upon event maturity, the oracle generates threshold signatures attesting to canonical outcomes. These cryptographically signed attestations are published on-chain, enabling DLC participants to deterministically unlock CETs through adaptor signature decryption.