How High Will Bitcoin Go? Here's the Better Question | Flare, Hugo Philion | EO

Why Flare is putting oracles inside the blockchain

Flare is betting that blockchains need data as much as they need logic. Bitcoin proved simple transfers and Ethereum added computation, but any application depending on outside information still trusts an oracle, which Philion calls the weak point in DeFi. Flare's answer is to enshrine data provision in the chain and push heavy computation off-chain.

Takeaways

• Flare enshrines data into the chain. Philion calls Flare the only third-generation blockchain. Bitcoin handled simple transactions and Ethereum added logic. Flare adds data to that logic, and has just passed about a million wallets and 100,000 to 150,000 daily active users.
• Oracles must be secured like the chain. DeFi runs on trust much like traditional finance, except banks are bound by law and oracle providers are not. Philion argues anything relying on data is valid only if oracles are secured clearly and openly, so Flare puts them inside the chain.
• Bitcoin bridge work spawned a data business. Wrapped Bitcoin, the largest source of Bitcoin on smart contract platforms, relied on a custodian, which Philion calls antithetical to Bitcoin. Flare built an over-collateralized bridge, needed price data, and produced two protocols that pull data from any open system.
• Blockchains stall until off-chain compute arrives. Philion says the chain is at the limit of what can be built until compute is added, and that far more data comes from other sources than the chain can use. Applications people actually want need that compute.
• Machine learning is the frontier he watches. The space Philion and his team most want to research is the outputs of machine learning models, where a decentralized, economically secure substrate could make models safer by involving multiple participants. He calls it the likely answer to what blockchain is useful for.
• Bitcoin rests on hashing power alone. Philion says Bitcoin is backed by hashing power, not by the ability to levy taxes or force people to use it, so voluntary adoption carries its value. People with a financial reason not to be convinced never will be.
• He left hedge funds for machine learning. Philion spent about seven years at London hedge funds before deciding he was only trying to make himself rich. He studied machine learning at UCL and met his two cofounders there. Flare started in 2018 in a photography studio basement with three people.

Flare's five-year bet

• Philion wants a nontrivial percentage of the data used on blockchains to come from Flare within five years, whether on Flare or on another chain.
• He expects off-chain compute to produce applications that go well beyond DeFi and speculative value and become part of daily life.