RedStone Modular Oracles boosting Celo Ecosystem projects

Governance
1

Abstract

Oracle conversation has been a significant topic in the Celo ecosystem for the past weeks and the RedStone team has been watching it closely as well. From our talks with Celo builders, we have seen that the scope of data needs in the ecosystem is wide and the deployment of oracle focusing on supporting blue chips price feeds will not address the majority of them.
On top of that, a monopoly is never a good option for an ecosystem and healthy competition between Oracle providers will motivate them to constantly improve the quality of services.

This proposal aims to raise awareness of RedStone Oracles models, their customisability and suggests the support of RedStone Oracles on Celo with a grant to cover gas, infrastructure and operational costs. We believe that this initiative will boost the Celo ecosystem and spark novel dApps development.

We intend to work hands-on with the Builders thus this proposal also suggests designating a dedicated RedStone-Celo team, which would continuously monitor ecosystem data needs and work hands-on with projects on analysis & launching of new feeds.

Background

We acknowledge that established dApps like Aave or Compound have been dedicated to one Oracle provider since their inception and will probably not enter a new ecosystem without the same infrastructure providers being available.

On the other hand, Web3 builders understand it is not DeFi Summer 2020 anymore and in 2023 there is no more “One Oracle type fits every use case” approach. When building novel and customisable dApps builders require flexibility - that is where RedStone Oracles answers builders’ needs with three tailor-made models.

  • RedStone is no stranger to the Celo ecosystem:
    • RedStone Core has been available for dApps since March 2022
    • RedStone won the Interoperability track at Celo Make Crypto Mobile 2021 hackathon and has been incubated in the Celo Camp program
    • RedStone co-sponsored one of the 2022 Celo hackathons, with submissions such as Cashout and Sarau
  • RedStone offers 3 Oracle models tailor-made to dApps needs, all based on an innovative modular architecture (flow & modules described in detail in Docs):
    • Core model (On-Demand): data is dynamically injected into users’ transactions achieving maximum gas efficiency and maintaining great user experience as the whole process fits into a single transaction. With this model, builders can experiment with novel Data Feeds (e.g. Temperature or Precipitation Data) as they don’t have to cover the gas cost of a standard on-chain storage Data Feed.
      Enables for: Creation of custom data use cases like climate or ReFi related.
    • Classic model (Push): data is pushed into on-chain storage via decentralized and permissionless relayers. Dedicated to protocols designed for the traditional Oracles model + getting full control of the data source and update conditions (dApp contracts and relayer operators specify heartbeat & deviation threshold).
      Enables for: Bringing over established dApps from other ecosystems; protocols bounded to on-chain Oracle integration still needing customizability of heartbeat & deviation.
    • X model (No Front-running): targeting the needs of the most advanced DeFi protocols by eliminating the front-running risk through offsetting the delay between the user’s interaction and the oracle price update
      Enables for: Creation of Perpetuals; Options; Derivatives; other new DeFi primitives

Example use cases

Below you can find some examples of projects powered by RedStone that could not be built with the traditional oracle providers:

  • I want to build a Perpetuals Protocol and spin new markets as quickly as possible to let my users invest in the latest market trends and mitigate front-running in GMX fashion. (Reason: traditional oracle providers have strict requirements for spinning up Data Feeds for new tokens and usually need +6 months to list them)

  • I want to build a custom liquidation mechanism to mitigate the risk specific to my novel Lending Protocol. (Reason: With traditional oracles, Builders need to adapt the infrastructure to the Oracle design, not the other way around)

  • I need specific weather Data Feeds to build my parametric insurance dApp where users can permissionlessly insure their vacation trip against unfavourable weather conditions. (Reason: Non-financial data is still practically unsupported by traditional oracle providers)

In general, building something truly innovative requires more than just the traditional infrastructure - we are here to help Celo Builders with that.

Proposal

  • To establish RedStone Oracles Pool to cover infrastructure, operating & team costs of RedStone Oracles on Celo.
  • We propose that the Celo Community Fund quarterly allocate 100,000 CELO for a period of 12 months to a dedicated RedStone-Celo Pool (exact dates of allocations can be agreed upon with the Celo Foundation). Payment of each consecutive allocation would be subject to a quarterly performance review and decided upon by the Celo Foundation. The 100,000 CELO has been calculated as the gas, infrastructure and operating costs for a 3-months period (see cost breakdown below).
  • Together with RedStone’s availability for integrations on Celo, a dedicated team of 3 people (Integrations dev, Core team member, Data quality eng) would be instituted to answer ecosystem projects needs, help them integrate RedStone choosing the best possible data sources (including new Celo specific tokens) and review integration code in terms of newest security practices.
    • RedStone has already established such cooperation & implementation for Mento Labs.
  • Part of the returned 120M Celo from Mento Labs could be used to boost the Celo ecosystem with RedStone Oracles & dedicated team responding to ongoing data feed needs.

Funds usage and Transparency

The funds will be used solely to cover setup, development and maintenance costs + Pay gas, which under today’s gas model, the majority of the CELO spent on gas would be returned to the community fund. Additionally, it will be used to compensate the dedicated RedStone-Celo team as described above.

Quarterly reviews will be conducted between RedStone and the Celo Foundation to ensure continual alignment on services provided to the Celo ecosystem. Whether to continue the program after each quarter will be decided by the Celo Foundation (more on that in the Governance section below) based on the cost and performance review provided by RedStone.

The program will last for 1 year and 2 months (if not concluded earlier by the Celo Foundation) before its end we’ll reevaluate costs & ecosystem needs with Celo Foundation and submit a new proposal based on the findings.

Cost breakdown

  1. Infrastructure costs - 200,000 Celo
  • Gas costs: ~$5,300 pcm
  • Nodes (servers & maintenance): $6,400

Total: $11,740.60 pcm / $140,887.20 yearly
In CELO: 17,015 pcm / 204,184.35 yearly

Calculations in Google Sheet

  1. Redstone Celo taskforce, hackathons, educational materials - 200,000 Celo
  • Designating a dedicated RedStone-Celo taskforce, consisting of Integrations dev, Core team member, Data quality eng
  • Digital materials supporting devs’ first steps using RedStone Oracles and understanding what can be built with it
  • A pool for hackathon bounties to be designed together with the Celo hackathons team

Governance & Multisignature

RedStone Oracles Pool will be jointly held by RedStone and the Celo Foundation.
However, the Foundation will keep the majority of signatures (3 out of 5) thus the ability to block further payments at any time in case any doubts arise or additional input is required. The Foundation also has the final decision right to change the amount paid out in the next quarter or terminate the program before the official date if they find it necessary.

Conclusion

RedStone has been a long-term Celo partner and has good knowledge of ecosystem projects. Many times the barrier to starting fruitful cooperation was initialisation costs. Given the unique nature of projects building on Celo, it requires a lot of custom Oracles work, which we are happy to accommodate with the RedStone Oracles Pool to cover the operating costs of RedStone Oracles updates.

17 Likes
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I think this is a reasonable proposal given RedStone’s longstanding support for the Celo ecosystem and because diversity among oracle providers will increase ecosystem resiliency.

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Thanks, Marcin for bringing up the proposal!
I’m curious, how quickly will you be able to add new Celo ecosystem tokens like i.e. upcoming stCelo?
Are there any requirements a token needs to pass to be added?

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Thanks, Lucas for your question, hope you and the Celo community had a great Easter Holidays time.

  1. How how quickly will RedStone be able to add new Celo ecosystem tokens like i.e. upcoming stCelo?
    → RedStone Modular architecture allows us to quickly add new tokens that protocols want to use. We would need to first understand price feed sources and dynamics of a token but technically adding a token shouldn’t be longer than a week. We’re the only Oracle providing stAvax for protocols building in the Avalanche ecosystem, therefore we will definitely add stCelo for builders here.

  2. Are there any requirements a token needs to pass to be added to RedStone feeds?
    → We review new data feed requests case by case, the rule of thumb is at least $1M Liquidity and 3 independent sources for us to consider adding a token. However, we are open to exceptions to that rule, i.e. 2 independent sources or a formula to calculate synthetic price - like in our GLP price feed. Also, bear in mind that we regularly assess currently provided feeds and stop support for those that are not used by any project and stop satisfying our diligence requirements.

Hope that helps, happy to answer your other questions!

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What about climate data feed, like carbon-related or weather related - is that what you mean in “Other section”? How easy would it be to add new feeds with environmental data? Will there be any additional costs to set them up?

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Good question @ReFiMe really relevant for the Celo ecosystem.
→ Mission of the Redstone-Celo task force will be to identify what data feed needs Celo builders have - including climate data like carbon-related or weather related. That’s what we mean by “Other section” so that we can assess the appetite of the ecosystem & business case for specific data feeds vs the cost of running it.

→ Adding environmental data feeds is technically easy, the most important question will be around the data source and use case. The cost of such a setup would be covered via RedStone Oracles Pool from this proposal.

If any questions remain - please do ask!

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That’s great! The oracle problem is still far from solved, we need a lot more R&D here. An active base of oracle providers is more than helpful. Especially, if they offer new architectures and solutions. And from what I can see Redstone is strong in that regard

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A very reasonable proposal IMO from a project that is a strong pillar of the Celo community for quite some time now - I am in support.

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@roman @Nadiem thank you for your support, RedStone team is dedicated to working in a close feedback loop with Mento and other ecosystem projects with a long-term relationship!

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