EigenLayer, Polymarket and UMA collaborate on 'next-gen oracle'

EigenLayer, Polymarket and UMA are collaborating to research and potentially explore the development of a next-generation oracle system.

"We’re working with UMA protocol and Polymarket to research a next-gen oracle utilizing the intersubjective security uniquely enabled by EigenLayer and the EIGEN token," EigenLayer said.

The oracle may utilize EigenLayer's infrastructure, likely tapping into its restaking mechanism and the EIGEN token.

UMA noted in a blog post the collaboration seeks to advance the functionality and reliability of prediction market oracles, ensuring they can handle a wide range of scenarios as markets grow and evolve.

It explained that the three teams are "creating an oracle that will allow prediction markets to more directly align dispute resolutions with their community and scale both oracle capacity and economic security."

EigenLayer allows users to reuse staked ETH or liquid staking tokens to secure additional services (like oracles or sidechains) while leveraging Ethereum's security.

The announcement could imply ETH stakers would opt to secure this oracle, improving its security with Ethereum's economic backing. EigenLayer said the oracle would make use of "intersubjective" truth — facts that a community agrees upon rather than purely objective data such as mathematical proof. This appears to align well with prediction markets.

In blockchain ecosystems, an oracle is a mechanism that brings real-world data (like event outcomes or prices) onto the blockchain for smart contracts to use. Prediction markets like Polymarket rely heavily on oracles to resolve bets by determining the truth of an event.

Polymarket, a decentralized prediction market platform where users trade on the outcomes of real-world events, currently uses UMA's Optimistic Oracle to settle markets but is seeking to enhance its capabilities.

Polymarket has been using UMA's oracle system since its early days. When a market closes, a proposer submits the outcome (e.g., "Biden won"). This is assumed to be true unless challenged during a dispute window. If disputed, UMA's decentralized voting mechanism kicks in to settle it.

Such a system differs from a decentralized oracle network such as Chainlink and Pyth that proactively fetches and aggregates off-chain data (e.g., prices or weather) from multiple sources, delivering it on-chain via a network of nodes.