Fresh off an inspiring Web3 Conference where we hosted our own OracleNode event, the Chainlink team carried the excitement over to the August 2019 ETHBerlin Zwei Hackathon. In addition to awarding €4000 in prizes to the top projects using Chainlink, Sergey delivered a speech entitled “Securely Connecting Smart Contracts to Off-chain Data and Events” and the team hosted a developer workshop.
Hackathon participants had 36 hours to build the best working blockchain application possible. Given the limitless possibilities by connecting smart contracts to external off-chain resources, it was encouraging to see a wide-ranging list of products emerge such as a dispute resolution for prediction markets, a DAO for hedging ETH gas volatility, and a white hacker bounty program.
First Place: Chainlink \u2661 Augur
Receiving the coveted first place honors of €2500 in LINK was Chainlink \u2661 Augur (nicknamed “Chaugur”), a two-person team composed of Peter Mitchell and Jasperdg de Gooijer from Flux Market — a platform where users can create derivatives based on the valuations of startups. Chainlink’s reputation system, staking, and threshold signature features are not yet running on Mainnet, which uses monetary rewards/punishments and decentralization to incentivize honest node behavior at scale. While there’s an extensive whitelisting process in place to onboard highly trusted nodes, some users may want a completely trustless process for obtaining external data that is immediately available.
Chaugur is a combination of Chainlink --- a decentralized oracle network, and Augur --- a decentralized prediction market. In Chaugur, Chainlink oracles are tasked with retrieving data and reporting it back to the querying smart contract. In cases where there are disagreements over the oracle data, Augur can be implemented as a backup layer of security while Chainlink’s reputation system is still under development. Augur’s prediction markets allow users to vote on data accuracy, such as taking a consensus vote on whether the market price of an underlying asset in a derivative’s contract was correct at the time of execution. Although it lengthens the amount of time between execution and settlement, Augur provides an optional method for arbitrating data by harnessing the “wisdom of the crowd” using monetary incentives.
The Chaugur team states that “By incorporating a secondary layer of security via Augur's dispute mechanism, we remove the financial incentive for a Chainlink Oracle Node to operate in bad faith.” Chaugur is a useful option for heightened oracle security, but the Chainlink team fully expects exceptional security at scale once our reputation, staking, and threshold signatures are live on Mainnet.
Second Place: VollgasDAO
Taking the second-place prize of €1000 in LINK was VollgasDAO, a three-member team of Max Fritz, Luis Schliesske, and Hilmar Orth. VollgasDAO is a decentralized autonomous organization (DAO) centered around minting, selling, and facilitating the redemption of gasFuture tokens using a smart contract and pooled fund of capital. The tokens are purchased for a fixed fee (which goes to DAO token holders) and represent ownership to a specified amount of gas that is redeemable at a future date. Thus, the VollgasDAO permits users to hedge against future gas volatility, while the DAO holders make a slight profit on facilitating a liquid market.
VollgasDAO uses Chainlink oracles to fetch the current ETH gas price from the EthGasStation API - a popular website for obtaining consumer data metrics on Eth gas. The current gas price fetched by the Chainlink oracles is then multiplied by the amount gasFuture tokens being redeemed to determine the total amount of ETH gas the user receives.
The team stated that “Scheduling transactions is becoming more and more popular on Ethereum. However, one of the biggest hurdles for users to do so is to estimate the future execution costs of relayers.” Chainlink alleviates this problem by providing reliable price feeds to facilitate tokenized futures on gas prices.
Third Place: Etherflare
Etherflare, a three-man team consisting of Bohdan Melnychuk, Bohdan Malkevych, and Kirill Kirikov earned the third-place reward of €500 in LINK. Etherflare is an incentive system that uses a smart contract to reward white hat hackers that engage in productive penetration testing (pen testing). Pen testing is ethical-based hacking designed to test a network’s systems for vulnerabilities and weaknesses that then become the basis for network improvements via patches and upgrades.
EthFlare allows web hosting companies (like Cloudflare) to issue tokens that hackers can purchase, which represent a particular company’s uptime. They can then reimburse those tokens with the hosting company at a profit if they successfully penetrate the system, or at a loss if they cannot. In the case of Etherflare, hackers must successfully perform a DDOS attack - flooding the website to cause downtime. Chainlink oracles are used to monitor the uptime of the company’s website for the last 30 days and report it back to the querying smart contract. This data is then used to calculate the tokens value at redemption.
Etherflare utilizes a skin-in-the-game approach to Internet security, whereas the web hosting company profits if they prevent a DDOS attack, but hackers prevail if they successfully launch one. The team expressed that “Chainlink makes it possible to use Internet data on-chain and invent completely new financial/insurance services. In our case, Chainlink allowed us to implement a new service agreement model with Internet security providers.”
All three hackathon winners demonstrated how Chainlink oracles can bring off-chain data onto the blockchain to trigger smart contracts with real-world impact. Data-driven smart contracts bring a paradigm shift to contractual agreements based around trustless automation and decentralized security. It’s not a futuristic concept, but ready for enterprises and developers to implement today!