Can Pyth Network (PYTH) make money from Price Feed Oracles?
Mr. Market thinks you can make money from Price Feed Oracles. For example, Pyth Network (PYTH) was CoinMarketCap’s most-trending cryptocurrency on 21 November 2023.
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Pyth is a decentralized finance (DeFi) protocol that lets users publish pricing information on the blockchain. A price oracle is any tool that lets users view price information.
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All DeFi protocols need price oracles because their users, speculators and investors need price information. Importantly, they base many trading strategies on prices.
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For example, in spread, or relative value, trading speculators try to profit from the spread, the price difference, between two investments. A speculator trying to spread trade two cryptocurrencies, derivatives, nonfungible tokens (NFTs), or synthetic investments needs accurate price information about both tokens. Hence, the speculator needs a price oracle.
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Spread trading is impossible without price oracles. Hence, many DeFi platforms, including decentralized exchanges (DEXes), need price oracles. The Pyth Network tries to cash in by offering price feed oracles.
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How the Pyth Network (PYTH) works?
The Pyth Network (PYTH)?lets developers build oracle feeds that provide market data to smart contracts.
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A smart contract is a digital robot that performs tasks on the blockchain. For example, a smart contract in the Tether (USDT)?stablecoin makes payments in US dollars held in trust accounts. Tether’s smart contract needs price information to make US dollar payments.
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Smart contracts perform all the tasks that make DeFi protocols work. For example, a lending protocol’s smart contract calculates and charges interest or makes payments. Meanwhile, a DEX’s smart contract uses a price oracle to set prices for trading pairs.
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Pyth’s oracle program collects data from multiple sources and aggregates it into a priced published online. Consumers read the data through the oracle program. They claim Pyth can publish this data instantly to create real-time price information.
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The Pyth Ecosystem
?Importantly, Pyth claims users can receive its real-time market data on over 40 blockchains. To provide that data, Pyth claims to offer over 380 data feeds for DeFi solutions. Plus, Pyth claims to provide data for over 230 apps, including DEXs, lending protocols, and derivatives platforms.
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Interestingly, they claim Pyth can make over 65 million price oracle updates for smart contracts.
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They claim major financial institutions publish data directly to Pyth’s network. Pyth claims its users include Binance (BNB), IMC, Tower Research Capital, Alpha Lab, Akuna Capital, Altonomy, bitbank, Belevedere Digital Assets, Bitmart, Bitsamp, BTSE, the Chicago Trading Company, CMS, CoinMetrics, Digital Asset Research, Flow Traders, Galaxy Digital Holdings, Gemini, Gate.io Geneva Trading, GMOCoin, HuobiGlobal, Jane Street, JST Capital, KGI Securities, Kronos Research, Raydium, Talos, Wintermute, Valour, xbullion, and Ox.
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They claim developers can build Pyth Price Oracle Feeds using the Ethereum Virtual Machine (EVM) or Cosmos Virtual Machine. A virtual machine is the digital computer that runs a blockchain. Developers need access to a virtual machine to build smart contracts that work on a blockchain.
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Pyth projects include TradingView, Synthetix, and the Venus Protocol. Synthetix is a tool developers use to build on-chain derivatives contracts.
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TradingView is a DeFi charting platform and social network. They claim over 50 million traders, investors, and speculators use Trading View. The Venus Protocol is an algorithmic money market system that supports lending and credit on Binance’s BNB Chain blockhain.
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Apps that use Pyth’s oracles include stablecoins, automated market makers (AMMs), decentralized exchanges, DEX aggregators, synthetic investments, derivatives, borrowing and lending, structured products, options, and trading.
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The Pyth Network (PYTH) is Big Data
I consider the Pyth Network (PYTH)?a big data solution for the financial services industry.
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Hence, Pyth could sell price oracles to many wealthy customers including banks, governments, brokerages, investment banks, trading firms, stock exchanges, private equity, hedge funds, and more.
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Unlike many DeFi protocols, the?Pyth Network (PYTH)?is selling a product for which there is a demand and a market. Speculators, developers, and DeFi protocols need price oracles and Pyth provides them.
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What Value does Pyth Network (PYTH) offer?
Conversely, the Pyth Network (PYTH)?was CoinMarketCap’s 2,168th?largest cryptocurrency with a 33.24￠ Coin Price on 21 November 2023.
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CoinMarketCap gave the Pyth Network a $496.17 million Market Capitalization, a $3.32 billion Fully Diluted Market Cap, and a $142.27 million 24-Hour Market Volume on 21 November 2023. They base those numbers on a 1.5 billion PYTH Self-Reported Circulating Supply, and a 10 Billion PYTH Total Supply.
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I consider Pyth Network an interesting DeFi protocol because there is an actual demand for its resources. However, the value of that demand is questionable. Yet, I consider Pyth a DeFi protocol to watch because it provides a service for which Big Finance will pay.
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*https://corporatefinanceinstitute.com/resources/career-map/sell-side/capital-markets/spread-trading
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