Have you ever wondered how important access to crypto market data is? How can we make sure that accurate price data from Binance, Bitstamp, Gemini and other crypto platforms is delivered fast across multiple blockchains such as Ethereum, Avalanche, Aptos, and many more? This is where Pyth Network comes in!
Pyth Network, also known by the marker ticker PYTH, is a first-party oracle network designed to provide off-chain data to mission-critical systems across multiple blockchains.
Or, more simply put, PYTH provides real-world data that enables important smart contracts to function properly.
However, what makes Pyth unique is how they have managed to find a niche in the already established crypto oracle market.
So, what is Pyth, how does it work, and what makes it unique?
Today, we find out.
What Is Pyth Network?
What Pyth does differently is take its oracle services to the enterprise level, making them suitable for large-scale business enterprises operating on the blockchain.
But to explain, crypto oracles are nothing new, and can best be thought of as data providers for blockchain networks.
By default, blockchains are siloed ecosystems with no contact with the outside world. For the execution of many smart contracts, blockchains need quick access to reliable and verifiable outside data. This is where crypto oracles come into play.
However, what makes Pyth different is their approach. Pyth is the largest first-party oracle network for publishing financial market data on-chain.
This is fundamentally what sets Pyth apart from its competitors, but I will come back to that shortly, as first, I think it’s important to understand how Pyth works.
How does Pyth Network work?
The Pyth network originally launched on Solana, which makes Pyth a Proof-of-Stake based cryptocurrency, however, it is worth noting that Pyth has now launched on multiple blockchain networks after the success of Pyth mainnet, or Pythnet, going live.
As of December last year, Pythnet has expanded to 45 blockchains and currently services 25% of all crypto applications that use oracles.
As Pyth was first launched on Solana, most of its architecture is based on Solana’s.
Pythnet is an application-specific blockchain on which the only programs and activities are related to price publishing, aggregation, and initiation of the data transfer to other blockchains.
As per their whitepaper, it notes, “successful cross-chain architecture must achieve several important properties: Minimise transaction costs, support high-frequency and low-latency price updates, scale to many blockchains, and scale to many price feeds.”
Which sort of gives you a rough idea of what the Pyth network hopes to achieve compared to its competitors in the oracle niche.
The Pyth network can fundamentally be broken down into three categories.
The Data Providers, the Pyth protocol, and the Data Users themselves.
The Data Providers supply pricing information to Pyth’s oracle program. Though, of course, Pyth doesn’t rely on just one provider, and instead uses multiple providers from its first-party network to ensure an accurate figure has been provided.
The Pyth protocol itself is a user interface which combines the provided first-party data into a single aggregated price.
The Data Users purchase and utilise the information produced by the oracle program.
However, it is important to point out that the Pyth network itself is not providing this data.
The Pyth protocol is a decentralised marketplace which aggregates the data provided and prepares it for delivery to applications across multiple, independent blockchains.
The reason Pyth can connect to these independent blockchains, which include the likes of Ethereum, Avalanche, Aptos, and many more, is through the Wormhole protocol.
To quickly summarise, the Wormhole protocol is a decentralised, universal message-passing protocol that enables blockchain interoperability.
But what really makes Pyth Network unique and what are the tokenomics of the PYTH token?
What makes Pyth Network unique?
The difference between Pyth and its competitors is where Pyth sources its data from.
Most oracles, or data providers, use aggregated data from third-party providers which themselves includes data taken from other data already aggregated by other third-party providers.
Alternatively, Pyth takes their data directly from the source, which includes some of those top trading firms, leading exchanges, and leading crypto companies.
To explain the difference, a first-party source is the original source of that data. It’s where the third-party sources get their data, so Pyth cuts this intermediary by itself becoming the third-party, which aggregates its own data but only from reliable first-party sources.
Deriving their data directly from first-party financial firms gives Pyth a massive advantage in terms of the speed that it can deliver its data to its users, which is often time-critical, especially when dealing with trades on DeFi networks.
PYTH Tokenomics
Like most Proof-of-Stake tokens, PYTH can be used for the classics such as network payments, staking, and governance.
In total, there will be 10 billion PYTH tokens, with 15% making up the initial circulating supply.
The remaining 85% is vesting and released over a schedule of 6, 18, 30, and 42 months after the initial token launch.
The total amount will be distributed as follows: 22% will go towards Publisher Rewards, 0.5% of which has already been unlocked. 52% will go towards the Ecosystem Growth, with 7% currently unlocked. 10% will go towards Protocol Development, with 1.5% unlocked.
Additionally, 6% went towards the Community and Launch, none of which is locked, and the final 10% went towards Private Sales, all of which is currently locked.
Pyth is a cryptocurrency that has certainly made an impact since launching.
By offering aggregated data from only first-party sources Pyth has found itself being widely adopted and available for use on many blockchains.
Of course, nothing is ever guaranteed in crypto, but it is clear the market seems to appreciate what Pyth is offering, and presuming that trend continues, I believe it is likely Pyth’s best days still lay ahead.