Oracle

Data sources

The Zephyr oracle client fetches and aggregates price information from both centralized and decentralized sources.

Centralized Spot Exchanges

Centralized Exchanges have significantly higher volume and liquidity compared to decentralized exchanges, so we can expect accurate and sub-second price information for each of our supported assets. The prices coming from CEXes are expected to form most of the index weight when an oracle submits a pricefeed, as the higher volume and liquidity give a more accurate "true price" of an asset.

Supported spot CEX sources include:

• Coinbase

• Binance (in development)

• FTX (in development)

Decentralized Spot Exchanges

Price feeds from spot decentralized exchanges are currently read through the API. These feeds are important in providing an estimation of the expected value of the token when swapped on-chain. Accurate DEX pricing can help route liquidation orders to the best exchange in the future.

Supported DEX sources include:

• Osmosis

• Nibiru (in development)

• Crescent (in development)

Aggregated Feeds

Aggregated feeds provide aggregated price data from multiple sources, which would include both centralized and decentralized spot and perpetual exchanges.

Supported Aggregated feeds include:

• Coingecko

Design

Current Design

An oracle is a whitelisted address that is allowed to submit a certain pricefeed. Oracles may be whitelisted for multiple pricefeeds and can submit multiple prices at once.

The Zephyr team maintains the whitelist for oracle accounts, and more can be added via governance. The centralized nature of the Oracle is optimal for launch, and will be phased out for a more decentralized solution.

Future Developments

The future design of the oracle will include redemption mechanisms for zUSD. For instance, if someone wants to redeem their zUSD for ATOM, they would be able to redeem it via the oracle that suggests the best price plus a variable spread. This opens up possibilities for multi-asset backed oracle governance, as well as zUSD-centric IBC/ICA DEX aggregation for the redeemed assets.