Introduction
With capital continuing to flood into blockchain ecosystems, the role of reliable and decentralized data feeds grows ever more crucial. As the industry matures, the financial complex is increasingly moving on-chain, with large institutional players embracing the tokenization of Real World Assets (RWAs). This shift taps into a massive $15 trillion total addressable market, as exemplified by BlackRock’s latest initiative to launch its first tokenized fund on Ethereum, BUILD. In tandem with this trend, the rise of new ecosystems and verticals amplifies the demand for advanced oracle solutions.
Inaccuracy or errors can lead to substantial financial losses and knock-on effects throughout the industry, underscoring the need for efficient, secure, and fast oracle solutions. Low-latency requirements necessitate a robust infrastructure to ensure seamless and uninterrupted operations. In the realm of modern DeFi, this need is even more pronounced.
This is why we see a significant opportunity for oracle teams to capture substantial market share by quickly adapting to emerging trends.
Why RedStone
RedStone is the fastest-growing oracle, standing out in this competitive vertical with its unique modular design, providing gas-optimized and secure price feeds across various ecosystems. Since 2020, RedStone has rapidly established itself as a key player in the oracle space, with a total of $4B secured, achieving 5% of market share quickly.
Currently, RedStone is integrated across 50 different ecosystems, with support for nearly 1200 assets, and 184 data sources. This extensive network and integration capability have allowed RedStone to dominate emerging verticals such as liquid restaking and the third generation of DeFi applications, including leading projects such as Ethena, Pendle, Gearbox and Morpho. Additionally, it powers many applications on non-EVM chains, such as being the only oracle on the TON network.
This success can be primarily attributed to a couple of factors, which we’ll discuss below.
Modular Design
Source: Redstone
RedStone’s sophisticated modular architecture leverages three distinct data consumption models—Core (Pull), Classic (Push), and X (Perps)—allowing it to provide reliable, high-frequency data feeds custom-designed to their clients’ needs. These models address different use cases based on their respective data feed frequencies. Notably, RedStone is the only oracle offering both the most popular models, Push and Pull, across multiple chains. In comparison, Chainlink supports the Push model with their Data Streams, but only on Arbitrum for 20 assets, while their pull-based model offers lower latencies. Meanwhile, Pyth exclusively supports the Pull model.
The pull-based model, in particular, offers considerably lower latencies and higher efficiency from a cost perspective compared to traditional push-based oracles, making it attractive for high-performance applications requiring high-frequency data feeds. In a pull-based model, data is requested on demand, similar to how REST APIs function, providing data only when needed. Consequently, this design choice results in lower costs, faster latencies, and greater scalability as it becomes easier to integrate with new ecosystems. This contrasts with push-based models, which continuously push data on-chain regardless of the demand, akin to a websocket feed, which can lead to higher gas costs and reduced scalability.
The pull model also offers instant compatibility with major DeFi applications such as Pendle, Morpho, and Gearbox. Since these applications operate on a pull-based model, where price feeds are requested only upon new smart contract calls, RedStone’s systems can be seamlessly integrated. A comprehensive breakdown of these different oracle model design choices can be found in the official documentation.
RedStone partners with 180 different on-chain and off-chain data sources, including major centralized exchanges, DEXes, and aggregators. This diversified approach ensures the reliability and security of its data feeds, reducing the centralization risk associated with relying on a single data source and mitigating common attacks such as price manipulation.
On top of that, it also features proprietary pricing methodologies that involve aggregating and monitoring slippage data from various DEXes, achieving greater results than traditional VWAP-based models, as it is more sensitive to sharp price volatility. This approach is particularly useful for LST & LRT price feeds, which have high utilization in DeFi, making lending markets relying on these data feeds more resilient to drastic liquidations caused by short-term price volatility, as bad debt risk is considerably mitigated. This was notably demonstrated during the ezETH depeg earlier this year, where RedStone’s price methodology reflected on-chain price fluctuations more effectively than other oracles, as shown by Nick Cannon from Gauntlet, with twice as many transactions triggered during critical moments compared to Chainlink.
Source: Redstone
Execution Speed and Strategic Positioning
As the blockchain space evolves towards a rollup-centric future, and with new ecosystems fast emerging, the demand for tailored, fast data feeds will grow. We believe Redstone has been capitalizing on this trend incredibly well — the team’s core focus on solving real developer problems and their agility in adapting to market shifts allows them to innovate and integrate with incredible speed. By doing so, they gain an early lead in various verticals, building strong network effects and aligning their market dominance with the success of these ecosystems. This strategic positioning enables RedStone to dominate new verticals as these trends materialize, effectively creating a long-term positive flywheel effect.
One major example of this effect was RedStone’s role in the restaking industry, which quickly grew to be a dominant DeFi theme in the past year. By being early and betting on EigenLayer, RedStone became the dominant leader in the liquid restaking token sector. Currently, they support assets from market leaders such as EtherFi, Renzo, and Puffer, guaranteeing seamless liquidity and accessibility. This is crucial for lending markets with high utilization of these assets, as they require price and constant data feed updates.
Additionally, this strategy also allowed RedStone to establish dominant positions in the Ethena ecosystem by being the first to provide price feeds to their synthetic dollar product, USDe.
Future Roadmap
RedStone is actively working with EtherFi and EigenLayer to integrate restaking into its infrastructure. This integration aims to reduce data delivery costs, increase the economic security of the system, and utilize decentralized RPCs backed by restaking. By becoming an Actively Validated Service (AVS), RedStone can bootstrap its economic security from EigenLayer, potentially enabling it to stand strongly against competitors, as it is able to borrow security from Ethereum to validate the accuracy of its data feeds in a cost-effective way.
From a value accrual perspective, RedStone is actively exploring the frontiers of Oracle Extractable Value (OEV), which refers to the value captured from price feed updates. It aims to mitigate the inefficiencies caused by OEV, which often result in value leakage and increased gas costs for users. To address this, RedStone proposes various designs for aggregated order flow auctions, allowing applications to auction their order flow to MEV bots, which charge a fee from running these auctions. The accrued value from these auctions can be later redistributed to users, or added to the treasury, both reducing costs while preventing value leakage from the ecosystem.
Other upcoming developments include Palette, a gas optimization upgrade for all ETH-correlated assets that makes contract reads from RedStone 80% cheaper for users compared to Chainlink. Furthermore, it aims to capitalize on its momentum by expanding its market share via new integrations in emerging ecosystems such as TON and MegaETH. Lastly, RedStone leverages Arweave to provide a fully transparent on-chain track record of any data provider, a critical feature as DeFi matures and attracts more institutional players through RWA integrations.
Closing Thoughts
In addition to their distinguished careers, Jakub Wojciechowski, RedStone’s founder and CEO, and Marcin Kazmierczak, the firm’s co-founder and COO, are world-class hackathoners. In a vertical where the pace of development is crucial, we believe they will outperform, especially considering their deep knowledge of open-source infrastructure development.
“The coming months will be interesting for the oracle sector. We’ve observed the emergence of new yield-bearing assets like Ethena and LRTs, and we should expect even more ideas to materialize. At RedStone, we are talking with builders day-to-day to keep up with the innovation cycle. We are glad to have Thanefield onboard with their edge in research,” said Marcin Kazmierczak, co-founder & COO at RedStone.
We are glad to support RedStone in their mission to innovate the oracle space with our Series A round investment. Their unique approach, execution ability, speed, and strong growing market position align with our vision of fostering groundbreaking technologies in the crypto industry.