The Pyth Network is a blockchain protocol specifically designed to deliver high-quality financial data directly on blockchains, making it a crucial bridge between traditional financial markets (TradFi) and decentralized finance (DeFi). In the DeFi world, applications such as trading platforms, lending protocols, and automated exchanges heavily rely on the accuracy and timeliness of data to execute smart contracts correctly. In this context, the Pyth Network serves as an "oracle," a system that acts as a bridge connecting data from the real world (off-chain) to the blockchain environment (on-chain).
What distinguishes the Pyth Network is its unique model as a "First-Party Oracle." Unlike oracles that rely on intermediaries or aggregators of data from external sources, Pyth obtains its data directly from its original source. This source includes a strong alliance of industry leaders such as major exchanges, market makers, and financial service providers. This model shifts the essence of trust, as reliance moves from a decentralized contract system to the trust of users in the financial institutions themselves that publish the data. This reliance on institutional trust is what makes the Pyth Network attractive to both newcomers and traditional entities alike, enhancing its credibility in the financial data market.
In simple terms, the Pyth Network operates through three main parties: "Publishers" who provide the data, "Consumers" who use this data, and "Delegators" who participate in the governance of the network. Publishers send their prices to the network, which in turn aggregates these multiple prices into a single reliable price, specifying a "Confidence Interval" that indicates the price's accuracy range. The network relies on a "Pull Oracle" principle, where data is not automatically sent to every application, but is kept on the Pyth Network, and applications pull it when needed. This model reduces transaction costs and network congestion, as users only pay gas fees when consuming data.
The PYTH token is the native token of the network.2 This token is primarily used in the governance of the network, allowing its holders to participate in making critical decisions regarding the protocol's direction. The Pyth Network has significantly expanded since its launch in 2021, now supporting over 40 blockchains and providing more than 380 data feeds, including data from traditional markets such as stocks, metals, and foreign currencies. This expansion makes it one of the largest and fastest-growing decentralized oracle networks.
The types of data provided by the Pyth Network vary to include different asset classes as detailed in the following table:
