Being Accountable Never Cheats: An Incentive Protocol for DeFi Oracles

Abstract

Recently emerging Decentralized Finance (DeFi) transforms traditional financial products into trustless and transparent protocols. However, these protocols often require real-time external price information, and in this respect an entity named oracle is proposed-a third party reporting the prices from real-world sources to the blockchain. Unfortunately, current oracle designs lack transparency, compatibility and accountability (e.g., report deviations and operational failures/anomalies). Further-more, they merely include economic rewards without fine-grained financial penalties. To address these problems, we present BANC, the first transparent incentive protocol that aims at accountability and compatibility for DeFi price oracles. BANC requires oracles to transparently declare a manifest such that their obligations can be provably examined by authorized punishers. With a fair dispute-resolution protocol, BANC enables compliant oracles to invoke self-justifications, which can be resolved by a watchtower consortium securely and efficiently. BANC is designed to enhance operational accountability of DeFi oracles, and can be compatible with most DeFi platforms at low cost. We fully implement BANC to evaluate its efficiency.