Pyth’s Pull core mechanism fits well with blockchain, especially supporting the rapid development of DeFi. Although Pyth is still in the early stages of development and has four times the growth potential compared to the leading Chainlink, it has become the second-largest oracle project in terms of the number of supported blockchains, service networks, and protocols. This article is sourced from an article written by @Peng_Investment and compiled and translated by DeepEcho.
Summary:
Pyth Network, based on the Solana blockchain, is a new generation oracle project. Its core mechanism, the “Pull Price Update Model,” updates only when needed by clients, providing significant advantages in terms of speed (300-400ms high update speed), asset coverage (supporting real-time price feed services from over 90 providers, 50+ blockchains, 144 service networks, and 162 protocols, second only to Chainlink), and accuracy (high fidelity) compared to traditional oracles.
Investment Overview:
The investment logic, risks, and analysis of Pyth Network are discussed in this article. It covers aspects such as data accuracy and reliability, decentralization risk, smart contract vulnerabilities, market competition, and regulatory compliance risks.
Technical and Business Development Analysis:
The technical analysis includes an overview of Synthetix, Helium, and Eclipse, while the business development analysis examines the market position and competition. Pyth Network has shown rapid growth and has the potential to become one of the top two oracle projects, competing with Chainlink for the leading position.
Team and Funding Situation:
The article discusses the team composition and funding situation of Pyth Network, highlighting the team members’ experience in blockchain project development and operations.
Token Economy:
The token economy of Pyth Network is described, including the token distribution, unlock schedule, and governance model.
Price Trend and Market Heat:
The article analyzes the price trend and market heat of Pyth Network, showcasing its potential for growth and market demand.
Conclusion:
Pyth Network, with its Pull Price Update Model, offers significant advantages over traditional oracles. Its broad asset coverage, speed, and accuracy make it a strong contender in the oracle field. With its experienced team and rapid business development, Pyth Network has the potential to challenge Chainlink’s position as the industry leader.Eclipse recently raised $50 million in Series A financing to launch the first layer-two blockchain using the Solana Virtual Machine (SVM) for execution and Celestia for data availability, while leveraging Ethereum as the settlement layer. The launch of Eclipse will attract liquidity from Ethereum users and guide them towards decentralized applications on the second layer of Solana. As a leading oracle for Solana, Pyth will support many extensions to the applications launched on Eclipse.
Pyth Network is currently considered the fourth-largest oracle project, with a Total Value Locked (TVL) of $2.112 billion, second only to Chainlink, WINkLink, and Chronicle.
In terms of the number of serviced networks, Pyth ranks second, servicing 144 networks, second only to Chainlink’s 353.
CertiK gave Pyth a security rating of 87.53, placing it in the top 10% of protocols in their survey.
The oracle space is a fiercely competitive industry dominated by Chainlink. Due to the lack of transparency in how oracle nodes obtain data, critics refer to Chainlink as a “black box.” Data sources are not labeled on-chain or on the Chainlink oracle node website. In contrast, by copying the transaction hash value from Pyth’s price information webpage to any Solana block explorer, every data point on the Pyth network can be traced back to the public key of each provider.
While data on Chainlink can also be traced back to Chainlink oracle nodes, Pyth’s data providers are first-party sources. Unlike Chainlink’s data, Pyth’s disclosed data comes from internal operations of exchanges, trading firms, market makers, and other institutions. However, the public keys of the providers are not publicly associated with their identities, adding an additional layer of trust network to how Pyth manages its providers, initially composed of approved providers.
Pyth focuses on traditional financial and cryptocurrency price information, while Chainlink has multiple products, including the Cross-Chain Interoperability Protocol (CCIP), Reserve Proof Information Sources, and developer tools (VRF, API functionality, and automation services), as well as its market data sources. Therefore, Pyth’s main product challenges Chainlink’s leading market data feed product, although Pyth also offers a random number generator through Pyth Entropy.
In terms of applications:
Pyth protects $5.5 billion in funds across 162 protocols on more than 50 blockchains.
Chainlink protects $38.7 billion in assets across 371 protocols on 19 blockchains.
Both systems have their advantages and disadvantages in terms of market data information flow. Pyth’s model is more suitable for scaling the quantity of price information flow while maintaining high update frequency. However, Pyth’s ability to maintain high-fidelity data relies on the assumption that the cost of reputation and consensus outweighs any potential benefits from malicious behavior for the providers. Its network stability depends on the normal operation of Wormhole.
In contrast, Chainlink’s model has lower trust in the original data source, as well as the relationship between the oracle network and the supported blockchains, as it obtains data from secondary aggregators and directly publishes it to the target chain. However, expanding data information flow and covering a wider range of blockchains comes at a higher cost. Therefore, as the cryptocurrency market continues to grow, new protocols need to consider and balance the costs and risks of implementing different oracle price information flows.
The startup company is Douro Labs, and its core members include:
CEO: Michael Cahill, previously worked on special projects at Jump Crypto.
COO: Ciaran Cronin, previously worked at Jump Trading and holds a master’s degree in Finance and Economics from University College Cork.
CTO: Jayant Krishnamurthy, Chief Technology Officer of Douro Labs and a software engineer at Jump Trading. He holds a Ph.D. in Computer Science from Carnegie Mellon University.
CIO: Harnaik Kalirai, former Chief Integration Officer at Jump Trading, with years of experience in system integration and operations, graduated from the University of Bedfordshire in the UK.
In addition, it is understood that besides the core executives mentioned above, members of the Jump Trading team are also important code contributors to Pyth:
Jeff Schroeder: Technical Director at Jump Trading, primarily responsible for Pyth’s core code.
Samir Islam: Technical Director at Jump Trading, holds a master’s degree in Computer Science from the University of Oxford and has been involved in Pyth’s code work.
Evan Gray: Vice President of Engineering at Jump Trading, involved in Pyth’s code work.
Alex Davies: Product Development Director at Jump Trading, one of the early employees of Jump Trading’s European branch, also involved in Pyth’s code work.
Rootdata disclosed that Pyth has received investments from institutions such as Delphi digital, Ailliance Dao, GBV Capital, Republic Capital, HTX Venture, KuCoin Labs, and Ryze Labs, with a current market value exceeding $500 million. It is worth noting that PYTH also received a grant of 40,000 OP from the OP Foundation.
To support the development of Pyth, the Pyth Data Association was established in Switzerland, with members including heavyweight institutions on Wall Street, such as Jump, SBF’s former employer Jane Street Capital, SIG, and market maker Virtu Financial.
The maximum supply of PYTH tokens is 10 billion, with an initial circulation of 1.5 billion (15%). The remaining 85% of PYTH tokens are initially locked and will be unlocked after 6, 18, 30, and 42 months following the initial token issuance. The specific allocation is as follows:
Issuer Incentives: 2.2 billion PYTH tokens allocated to Pyth Network’s data providers, accounting for 22% of the total supply.
Ecosystem Development: 5.2 billion PYTH tokens allocated to support contributors to the Pyth Network, including developers, educators, researchers, etc., accounting for 52% of the total supply.
Protocol Development: 1 billion PYTH tokens allocated to core contributors focusing on building oracle tools, products, and infrastructure, accounting for 10% of the total supply.
Community and Launch: 600 million PYTH tokens allocated for activities and initiatives during the initial launch stage, with all tokens unlocked on the first day, accounting for 6% of the total supply.
Strategic Contributors (Private Placement): 1 billion PYTH tokens representing the two rounds of historical financing allocated to strategic contributors, with these tokens locked and unlocked according to the aforementioned unlocking schedule, accounting for 10% of the total supply.
On May 20, 2024, 21.25% of the tokens will be unlocked, with strategic contributors unlocking 250 million PYTH, protocol development unlocking 212 million PYTH, ecosystem development unlocking 1.12 billion PYTH, and issuer data providers unlocking 537 million PYTH.
On May 20, 2025, 21.25% of the tokens will be unlocked, with the same proportions as above.
On May 20, 2026, 21.25% of the tokens will be unlocked, with the same proportions as above.
On May 20, 2027, 21.25% of the tokens will be unlocked, with the same proportions as above.
PYTH tokens are SPL tokens (equivalent to ERC-20 tokens on Ethereum) on Solana. Its core function is governance. PYTH holders can participate in protocol development by staking assets and voting to support Pyth Improvement Proposals (PIPs). Currently, the only proposals that have been or are being voted on include the Pythian Council election and the approval of the Pyth DAO constitution. Governance covers typical topics that can be modified, including:
On-chain software updates
Incentive structure for data providers
Rules for creating permissioned providers
Existence of sizes, denominations, and fees for oracle updates
Adding new price sources and determining who supports them
The Pyth DAO consists of the Pythian Council and the Price Feed Committee. Every six months, both committees hold elections to rotate committee members. Additionally, members who participate less than one-third of the time will be excluded from re-election. This system ensures active participation of members and alignment with Pyth’s goals. Both committees are responsible for voting and executing certain operational PIPs.
Pythian Council: The Pythian 7-of-9 multi-signature wallet has eight members and operational wallet holders as signers. Four members are replaced with each election. They have the authority to vote on operational PIPs related to oracle program updates, verification mechanisms, oracle update fees and denominations, and operations related to PGAS (allocation/delegation to Pythnet validators).
Price Feed Committee: The Price Feed 5-of-8 multi-signature wallet has seven members and operational wallet holders as signers. Three members are replaced with each election. They are authorized to vote on operational PIPs related to the operation of the provided price feed collection, publisher selection, and feed requirements (i.e., minimum and maximum providers for each source). Currently, proposal creators need to hold 25 million PYTH to create a proposal.
The Pyth DAO consists of two types of PIPs: constitutional and operational.
Constitutional PIPs involve protocol updates, determining the structure, and guiding the management of the Pyth DAO. They require over 67% support to be implemented.
Operational PIPs involve finance, Pythian Council and Price Feed Committee elections and management. Voting for these PIPs can be delegated to committee members and require over 50% support to be implemented.
Currently, Pyth’s circulating market value is $643.43 million, with an FDV valuation of $4.29 billion. In the same period, Chainlink’s circulating market value is $9.71 billion, with an FDV valuation of $16.54 billion.
Although Pyth ranks fourth, behind Chainlink, WINkLink, and Chronicle, it is the only decentralized pull-mode oracle model among the four. It currently supports over 50 blockchains, far exceeding Chainlink’s 19.
Moreover, Pyth has rapidly developed to become the second-largest oracle project in terms of the number of serviced protocols, surpassing the third-place project. Combined with the rapid growth of the decentralized finance (DeFi) market (the total locked value (TVL) of DeFi could reach trillions of dollars), Pyth has great development potential and a good chance to become one of the top two oracle projects.
Therefore, based on half of Chainlink’s total market value and considering the factors of this year’s bull market (the price reached a high of 1.15), a fourfold valuation space is given to Pyth. With the current price of 0.4253, the target price is expected to reach 1.7 or above, and it is recommended to sell at 1.7 or above.
The overall price trend of Pyth is upward, reaching a high of over 1.15 (early March), then following the overall market, experiencing a pullback to 0.4. With the reopening of the subsequent bull market, the price will return to an upward path.
There is also a high level of attention to Pyth in the market, as shown in the three images below:
Although the price of Pyth has experienced a pullback due to the overall market correction, the market and KOLs have always shown strong interest in Pyth, with a significant increase in KOLs’ attention to Pyth recently. This also indicates Pyth’s technical advantages and future prospects.
Overall, Pyth’s pull-based core mechanism meets the needs of the current blockchain, especially DeFi, for rapid development. Its high speed, broad asset coverage, and high fidelity are necessary conditions for the flourishing development of the blockchain. Currently, Pyth is still in the early stages of development. Compared to the leader Chainlink, it has four times the growth potential. However, it has grown to become the second-largest oracle project in terms of the number of supported blockchains, serviced networks, and protocols, second only to Chainlink. Its future is promising.
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