Written by: Pyth
Compiled by: TechFlow
The Internet has changed rapidly over the past year.
In the Web3 space, decentralized finance is experiencing a renaissance led by perpetual derivatives, hybrid scaling methods, liquidity staking, and Meme coin culture. DeFi has become popular again, and the entire ecosystem is feeling the crazy market.
Meanwhile in the Web2 space, large language models and generative AI content are changing the way content creators and consumers interact. “AI-powered” tools don’t explain where their answers come from; traffic and ad revenue don’t flow to original proprietary datasets. As data owners privatize their content to monetize it, the open internet is likely to shrink.
What is the status of the Pyth network in the current situation?
Pyth's contributors envision a world where smart contract developers and general internet builders can access market data instantly as it is created. The value of financial data (asset prices, recent trades, recent buy and sell information) depreciates rapidly over time. Financial applications, DeFi or CeFi are only as valuable as the data that protects their operations.
In a world where data privatization has become the new normal, the old solutions of obtaining, scraping or copying public data to pass on to downstream blockchain users are not sustainable. Even the encrypted trading data on CEX requires payment to adopt.
As decentralized finance expands and traditional capital market systems begin to adopt on-chain rails and tools, the role of data oracles becomes increasingly important.
Pyth Network serves over 330 applications on over 55 blockchains, has achieved cumulative transaction volume of over $300 billion, and currently provides over 500 real-time price feeds across traditional and digital asset classes.
The driving factor behind this growth is Python’s ability to scale to wherever developers live, deliver the data they need wherever they choose to build, and meet the needs of an audience that has grown up on Web2 without compromising on the reliability, accuracy, and latency requirements.
The way we behave online and on-chain is constantly changing: even so, the Python Network is still securing the value we exchange globally and powering the applications we rely on. This post highlights the latest achievements and growth of the Oracle Network over the past quarter.
key emphasis
Who is not powered by Pyth?
Who isn’t powered by Pyth today? According to the latest statistics from DefiLlama, the Pyth network protects a quarter of DeFi protocols. As measured by Pyth contributors, the proportion is much higher: more than 330 on-chain and off-chain applications rely on Pyth data for mission-critical operations.
The main drivers driving adoption of the Pyth price feed are: low latency updates, comprehensive asset coverage, and a full suite of usability on all the chains developers want to build on.
Latency is critical for accuracy and security. This has always been a core principle of Pyth. Price updates every 400 milliseconds make the next generation of DeFi services possible.
Asset selection also makes a big difference for protocol founders. From newly launched digital assets to more traditional tools, developers seek to provide markets and services that their users demand. Traders appreciate this choice.
By extension, the full suite of 500+ Python price feeds is available on all Python-enabled blockchains, meaning developers can reach their users’ favorite markets wherever they choose to deploy.
Banks are joining Python
The Pyth Network sources data from first-party sources and active market participants: traders, market makers, exchanges, and DEXs. By March 2024, the banking community will also join the Pyth Network's mission.
Nomura’s digital asset subsidiary Laser Digital has joined the Pyth community of data providers, contributing its own digital and traditional asset price data to enhance the oracle network’s data coverage. Laser Digital is not only the first in the banking world to join the Pyth network, but is also participating in the Web3 world as a direct and real-time price data contributor.
Laser Digital joining the Pyth data provider community is a major milestone for traditional finance and DeFi. Pyth oracles provide a unique channel for traditional banking to explore the on-chain world. In turn, decentralized finance also benefits from enhanced access to market data —.
New Python product launch: Entropy
Pyth Entropy, a new on-chain random number generation solution for driving unpredictable outcomes, has been released on EVM mainnets, including on Arbitrum, Blast, Chiliz Chain, Mode, LightLink, and Optimism.
While existing on-chain RNG solutions already exist, they require strong trust assumptions or complex cryptography. Pyth Entropy is based on a reveal protocol based on two-party commitments — a well-known RNG protocol in the cryptography space. Entropy is designed to be easy to integrate, reliable, and responsive.
Entropy is designed to secure a range of decentralized use cases: prediction markets, NFTs and generative art, social media and gaming, etc. Some decentralized applications have already begun integrating with Entropy, such as SlashToken on Chiliz Chain, and FLAP and Fungible Flip on Blast.
Python committee elected, Python governance takes the lead
Pyth governance is responsible for important protocol parameters, from update fees to the reward distribution mechanism for data providers, as well as software updates for on-chain programs and how price feeds are listed on Pyth.
The Pythian Committee and the Price Feed Committee are elected by the Pyth DAO, and these two committees will be authorized to perform specific powers and important actions.
The Pythian Council consists of eight members who are signatories of the Pythian multi-signature wallet. Pyth Improvement Proposals (PIPs) that can be delegated to this council include upgrading oracle programs, setting data request fees for each blockchain, and other protocol or network fees. The Pyth DAO Constitution explains the roles, powers, and procedures of governance.
On March 7, the Pythian Council members were elected and approved by the Pyth DAO. Members come from Synthetix, HMX, Wormhole Foundation, Douro Labs, Solend, and the Pyth Data Association.
The Price Feed Committee consists of seven members who will be signatories of the Price Feed multi-signature wallet. PIPs that can be delegated to this committee may include managing the list of price feeds available through Pyth, selecting data providers, setting a minimum number of data providers per price feed, etc.
On March 29, the members of the Price Feed Committee were also elected and approved by Pyth DAO. The members are from Synthetix, NOBI, Douro Labs, Swissborg, ReactorFusion, and Pyth Data Association.
The Operational Pyth Improvement Proposal has been passed. Community members can stake their PYTH governance tokens to participate in on-chain governance and help shape the network together.
Python Airdrop Review: Phase 2
The first phase of the Pyth network’s retrospective airdrop program was announced in November 2023. PYTH tokens were distributed to more than 90,000 wallets across 27 blockchains and 200 applications during this initial phase.
The second phase of the airdrop oversaw the distribution of PYTH tokens to over 160 decentralized applications powered by Pyth data. These protocols span the EVM, Cosmos, Rust, and Move ecosystems and rely on Pyth to support their exchanges, settlements, and transactions.
Readers can expect announcements from many of these applications’ contributors and founders on how they plan to use their allotments.
Douro Labs Research on Liquidation Fragmentation
In a series of MEV (“Maximum Extractable Value”) research articles, Douro Labs contributors said DeFi doesn’t have to be a dark forest.
Their first paper provides a taxonomy of MEV and refutes the view that MEV is inevitable or necessarily opaque. In fact, MEV is a suboptimal protocol design arising from a trade-off between value capture and complexity. An examination of different MEV mitigation techniques shows that a solution is needed that reduces both protocol and searcher complexity.
More specifically, the current state of protocol design acknowledges the pain points of both parties: liquidations often leak value to miners unnecessarily; and searchers must deal with the fragmentation of liquidations between protocols.
This research series and its development can be found here.
Active Pythian community
The Pythian community is entering a new golden age. The Pyth Discord now has over 80,000 Pythians — a 120% increase since January 1st. All newcomers are welcome. Discord is the place for Pyth DAO members, Pyth governance, and Web3 denizens to relax and share ideas with like-minded people.
The Pyth social channels host many regular events, from Poker Nights to Mindful Mondays. The Discord hosts regular UFC watch parties, gaming hours, and other events for everyone to join in. Ideas for community events are always welcome, be bold and say hello to the admins!
Ecosystem data
The Python Network Today
Many have likened the Pyth ecosystem to the AirBnB model or Spotify streaming service for financial data: creators and owners of key data can participate in the economic activity of the Pyth decentralized market. Downstream users benefit from secure direct access and, over time, a wider selection of assets.
Today, the Pyth oracle network sources data from market makers, proprietary trading firms, decentralized exchanges, centralized and traditional liquidity venues, and more recently, investment banks and fintech players.
Data users cover a wide range of DeFi infrastructure: decentralized exchanges, perpetual futures and derivatives, lending platforms, structured product vaults, stablecoin protocols, transaction data analysis, decision-making intelligence solutions, etc.
The growth metrics below provide data visualizations showing the growth of the Python network this quarter and over the past year, from adoption to feature offerings.
The Python network has over 330 integrations with Web3 and Web2 applications. This figure represents user growth of at least 175% TTM.
"Identified" is a nod to the permissionless nature of integration with the Pyth price feed. In line with Web3's mission, any protocol can leverage Pyth's price data without contacting the sales team. In other words, any application can be powered by Pyth without letting Pyth contributors know. Therefore, application integration counts are always conservative estimates.
Unification of the world on the chain
The Python Network is a leader in this mission, serving 56 blockchains, ensuring constant, reliable access to hundreds of low-latency data sources on each chain.
Over the years, Python contributors have found that smart contract developers have a consistent ultimate vision for DeFi: a seamless experience that abstracts the current complexity of liquidity fragmentation, blockchain interoperability, and service access.
Pyth’s cross-chain oracle approach enables DeFi applications to focus on providing the best user experience without having to worry about the blockchain they choose. This is a critical first step in bringing DeFi to where it needs to be: mainstream and hidden, powering the things that matter in our daily lives.
Trading volume reaches record high
The total volume secured by Pyth oracle data is another good metric for tracking usage and adoption. In early April, the cumulative volume secured by the Pyth network over the lifetime of the oracle protocol exceeded $300 billion.
March was an exceptionally active month for Python-powered applications, particularly for the Solana, Arbitrum, Optimism, and Blast ecosystems. This month alone, Python oracles secured $87 billion in volume.
The value of Python's guarantee
Total Value Secured (TVS) is an oracle-driven subset of the Total Value Locked (TVL) of smart contracts. TVS primarily tells a story about lending and pool-based operations. In March, the Python network’s TVS exceeded $7 billion. The continued growth of Python-powered TVS shows the resurgence of DeFi as an industry influx looks like the next bull run, as well as the growing appeal of Pyth price feeds in perpetuals and trading outside of DeFi.
Your new choice of oracle
However, Total Value Secured (TVS) as a standalone metric does not indicate the actual growth of oracles due to the situational nature of the metric. If TVL grows due to macro considerations, then the TVS of oracles should rise accordingly.
The Pyth TVS by L1/L2 chart above provides important additional framework: the total secured value (oracle-driven TVL) of any blockchain provides another way to proxy oracle market share. Consider the chains where the Pyth network dominates in TVS, from the Move space (Aptos and Sui) to Cosmos (Sei, Injective, and Osmosis) to ZK chains like zkSync and Linea. Across these chains, Pyth oracles secure the vast majority of locked value in the applications, showcasing Pyth as the oracle of choice in these ecosystems.
However, TVS only tells one side of the growth story. The low latency and high fidelity data capabilities of the Pyth network make it the oracle of choice for many derivatives applications, which typically generate a lot of volume and do not have a lot of TVL metrics. Therefore, looking at the percentage of overall volume secured at a certain point in time, Pyth's dominance on more blockchains can be seen.
The chart above of secured volume on L1/L2 highlights the DeFi ecosystems where Pyth is the first and foremost oracle provider. In other words, there are blockchains where Pyth is the leading DeFi oracle supporting transaction-based activity. One can see this dominance in the Cosmos and Move worlds as well as high-throughput alternative L1 and L2 such as Injective, Linea, Mode, and Fantom.
All DeFi is calling Python
Pyth data providers transmit price data to the Pythnet application chain every 400 milliseconds. Whenever a user wants to use a price update and verify that it came from Pythnet, they pay a small on-chain fee and pull that price into their environment for everyone to use.
The number of price update requests or pulls can provide insight into activity in the DeFi industry as a whole and in a specific blockchain ecosystem. The above chart shows the average daily average number of price updates (DAU) at around 3 million updates. While oracle update fees are currently minimal, Pyth governance can vote on the size and denomination of these fees. Revenue generated by the Pyth protocol currently sits on-chain; collective governance will decide the next course of action.
More data sources
The Pyth network now offers over 500 real-time price feeds covering digital assets, forex pairs, metals, stocks, and exchange-traded funds. More data sources means more available markets and features for protocol developers to launch.
The community continues to request many other assets, including those not available on-chain. For example, providing price feeds for traditional assets such as energy, agriculture, and even Treasury rates could potentially unlock on-chain portfolio diversification strategies that meet the needs of sophisticated participants.
