EigenLayer, Polymarket, and UMA Join Forces to Develop Next-Generation Oracle System

EigenLayer, Polymarket, and UMA have announced a collaboration to research and potentially develop a next-generation oracle system, leveraging EigenLayer's infrastructure.

Three protocols in the decentralized finance (DeFi) space, EigenLayer, Polymarket, and UMA, have announced a collaboration to research and potentially develop a next-generation oracle system, according to a statement shared with CoinDesk on Monday.

The new oracle is expected to leverage EigenLayer’s infrastructure, including its restaking mechanism and the EIGEN token, to enhance the functionality and reliability of prediction market oracles.

Oracles play a crucial role in blockchain ecosystems by bringing real-world data onto the blockchain, enabling smart contracts to function based on external information, such as event outcomes and prices.

Polymarket, a decentralized prediction market platform, currently employs UMA’s Optimistic Oracle to settle market outcomes. When a market closes, a proposer submits the outcome, which is presumed true unless challenged within a specified dispute window.

EigenLayer, on the other hand, allows users to utilize staked ETH or liquid staking tokens to secure additional services, such as decentralized exchange (DEX) trading, NFT minting and now oracles, all while earning rewards. The services are powered by EigenLayer, which is secured by ETH.

The proposed oracle is designed to utilize "intersubjective" truth, relying on community consensus rather than solely objective data. This approach aligns with the nature of prediction markets, where community agreement is essential.

"Intersubjectivity is a key concept in the philosophy of knowledge, and it refers to the idea that knowledge is something that is shared and agreed upon by a community of knowers," Greg Diprisco, EigenLayer’s head of product, told CoinDesk.

"In the context of prediction markets, this means that the truth of an event is something that is determined by the collective belief and agreement of the market participants," he added.

Polymarket has been using UMA’s oracle system since its inception, but the collaboration with EigenLayer and UMA aims to enhance its capabilities further.

Unlike decentralized oracle networks such as Chainlink and Pyth, which actively fetch and aggregate off-chain data from multiple sources, this new oracle system seeks to create a more reliable mechanism for determining the truth of events in prediction markets.