Understanding Pyth: A Star Project in the Solana Ecosystem, a New Paradigm for Oracles, and a Connector to Traditional Finance
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Understanding Pyth: A Star Project in the Solana Ecosystem, a New Paradigm for Oracles, and a Connector to Traditional Finance
An oracle is a bridge connecting the blockchain world with the real world, enabling the blockchain to access real-world data.
Navigating Web3 tides with focused insightsAuthor: 0xnoon
In 2022, which projects are the most anticipated?
If we had to name one, undoubtedly Pyth Network—the oracle project in Solana’s ecosystem—would be on the list: its mysterious yet powerful team background; numerous top-tier Wall Street financial institutions and major crypto organizations collaborating with Pyth as data providers...
- In June, GTS—one of the largest market makers at the New York Stock Exchange—announced a partnership with decentralized oracle project Pyth Network to enter the decentralized finance space. LMAX Group, an institutional exchange, announced it would provide foreign exchange and cryptocurrency trading data to Pyth Network. Virtu Financial, a large high-frequency trading market maker, announced it would supply stock, forex, futures, and cryptocurrency market data to Pyth Network.
- In July, the Bermuda Stock Exchange (BSX) announced it would provide real-time stock market data to Pyth Network. Cryptocurrency derivatives exchange FTX announced it would provide cryptocurrency price data to Pyth Network.
- In September, digital asset commercial bank Galaxy Digital announced a cooperation agreement with Pyth to provide on-chain trading data.
- In November, quantitative trading technology firm Tower Research Capital (TRC) announced a collaboration with Pyth Network, under which TRC will provide real-time Bitcoin price data to Pyth.
- In December, global digital asset financial services company JST Capital announced a partnership with Pyth to provide real-time, institutional-grade crypto market data.
- ……
Why are so many traditional financial giants and crypto institutions choosing to collaborate with Pyth? How does it differ from Chainlink?
What is Pyth?
Before understanding Pyth, you first need to understand what an oracle is.
According to a previous definition by the People's Bank of China, an oracle is a mechanism that writes off-chain information into blockchains. Its function is to bring external information onto the blockchain, enabling interoperability between blockchains and the real world. It allows deterministic smart contracts to react to the uncertain external world and serves as the sole channel for smart contracts to interact with external data—the interface between blockchain and reality.
Simply put, an oracle is a bridge connecting the blockchain world and the real world, enabling blockchain systems to access real-world data.
Today, oracles have become indispensable infrastructure in the crypto world, especially in the DeFi domain.
Lending protocols rely on price oracles to determine when to liquidate user loans. If a user's collateral drops below a certain threshold, their account becomes eligible for liquidation.
Derivatives platforms use oracles to calculate the value of crypto assets, including options, futures, and synthetic assets.
Index platforms (such as Set) use oracles to retrieve prices of index components.
Without oracles, the crypto world would lack traffic signals and descend into chaos.
Overall, Pyth Network aims to bring high-fidelity financial data (HiFi) into DeFi, delivering real-time real-world financial market data to solve DeFi’s problem of accessing real-world data.
Pyth has outlined detailed goals:
1) Using Pyth data will make smart contract data more accurate.
2) Enable DeFi full access to vast amounts of high-fidelity financial service data, making smart contracts work smarter.
3) Connect market data from the world’s largest professional traders and exchanges to any smart contract.
4) Retrieve verified data from high-quality nodes at millisecond speed.
Since its mainnet launch in August, a total of 37 Solana-based applications have integrated Pyth’s oracle services, spanning DEXs, derivatives, DeFi lending, stablecoins, synthetic assets, ETFs, asset management platforms, and infrastructure…
Star projects within the Solana ecosystem, such as Jet Protocol, Lifinity, and Drift, all use Pyth price feeds.
How is it different from Chainlink?
When talking about oracles, Chainlink is an unavoidable benchmark. What exactly differentiates Pyth from Chainlink?
Overall, Pyth adopts a fundamentally different design approach compared to Chainlink. The core difference lies in: Who submits data on-chain?
Chainlink’s mechanism includes three roles: data consumers, oracle nodes, and data sources. Third-party nodes submit and aggregate data, acting as intermediaries while also earning revenue.
Pyth’s mechanism is direct and peer-to-peer—data providers place their data directly on-chain, eliminating third-party intermediaries. This is the key distinction and what Pyth promotes as "Hi-Fi for DeFi": high-fidelity financial data.
Secondly, because data providers do not need to share revenue with intermediary nodes, their own profitability improves.
This difference also relates to blockchain selection. Chainlink can perform data aggregation either on-chain or off-chain. In on-chain aggregation, each oracle node must pay gas fees when submitting prices to the smart contract. Off-chain aggregation only requires one aggregated price to be submitted on-chain, reducing costs.
However, Pyth chose Solana as its home base. With Solana’s high TPS and low gas environment, it becomes simple and efficient for data providers to directly submit and aggregate prices on-chain, allowing Pyth to opt for fully on-chain aggregation.
Eliminating intermediaries and enabling data providers to feed prices directly on-chain is no easy feat. Beyond technical capability, it requires strong business development skills—this is where Pyth excels compared to other oracles.
Data on stocks, bonds, futures, forex, and commodities is often controlled by a few large centralized institutions—for example, GTS, a major NYSE market maker. Pyth’s ability to partner with these elite financial institutions, consolidate real-world financial data, and bring it directly on-chain is precisely Pyth’s specialty and unique advantage.
Overall, compared to other oracle solutions, Pyth stands out in the following ways:
1. Currently, 41 traditional financial institutions and top crypto organizations serve as data sources, including GTS—one of the largest market makers at the NYSE—and leading crypto derivatives exchange FTX—with more partners continuously joining.
2. Eliminates third-party intermediaries by having data sources provide data directly on-chain—ensuring high fidelity.
Team Background
Currently, the Pyth team has not publicly disclosed member details, maintaining an air of mystery. However, GitHub contribution records offer insight into Pyth’s builders:
Records show that members from Jump Trading are currently Pyth’s most significant contributors:
Jeff Schroeder: Technology lead at Jump Trading, primarily responsible for Pyth’s core code;
Samir Islam: Technology lead at Jump Trading, Oxford computer science master’s graduate, involved in Pyth’s coding;
Evan Gray: Vice President of Engineering at Jump Trading, contributed to Pyth’s code;
Alex Davies: Head of Product Development at Jump Trading, one of the first 10 employees at Jump’s European division, also contributed to Pyth’s code.
Additionally, on April 7 this year, in Jump’s podcast “The Jump Off Point,” then-president and CIO Dave Olsen provided a detailed introduction to the project, stating it was incubated by Jump.
Who is Jump Trading?
Jump Trading was once known as one of Wall Street’s most secretive high-frequency trading firms and is a clearing member of CME (Chicago Mercantile Exchange), including providing liquidity to Robinhood.
This year, Jump Trading stepped out of the shadows—announcing in September a new $350 million fund dedicated to equity and token investments in DeFi, blockchain infrastructure, and Web3-related fields.
But Pyth isn’t solely operated by Jump. To support Pyth’s growth, the Switzerland-based Pyth Data Association was formed, with members including heavyweight Wall Street institutions such as Jump, SBF’s former employer Jane Street Capital, SIG, and market maker Virtu Financial.
As for Pyth’s investors, there has been no comprehensive disclosure, and Crunchbase profiles remain incomplete. Known backers include Jump Trading, Alameda Research, Sino Global Capital, Multicoin, and GBV.
Pyth Token
Since Pyth has not yet issued a token, investor attention centers on whether a token will be launched, when, and what the economic model will look like.
Based on available information, Pyth is highly likely to issue a token.
A previous WSJ report stated: “Companies like Virtu (a market maker) are currently providing data to Pyth for free. But the service may eventually shift to a model where companies are rewarded for their data—possibly through a new Pyth token.”
Therefore, to prevent data providers from indefinitely “contributing out of goodwill,” Pyth needs to issue a token for incentives and establish a sustainable economic model. This implies that top-tier Wall Street market makers like GTS and Virtu could become holders of Pyth Token.
From this perspective, Pyth effectively becomes a bridge connecting Crypto and traditional finance, helping numerous traditional institutions open their first door into the Web3 world.
Although Pyth faced criticism after Solana experienced an outage—during which its Bitcoin price feed dropped 90%, severely deviating from the real market—from a developmental standpoint, Pyth still represents a newer, stronger force. The crypto world needs growth and expansion beyond its borders.
In 2022, Pyth is worth watching.
References:
Pyth official website: https://pyth.network/
Pyth Chinese Twitter: https://twitter.com/PythCHN
Pyth Chinese Telegram community: https://t.me/pythchinese
Note: Pyth has established a Chinese community. Add WeChat TechFlow 01 and send “Pyth” to join the WeChat group.
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