Where Pyth is Now | Q1 2024

The Internet has rapidly transformed in the past year.

In Web3, decentralized finance is experiencing a renaissance, spearheaded by perpetual derivatives, hybrid approaches to scaling, liquid staking, and meme token culture. DeFi has become cool again, and the wider ecosystem is feeling the chaos.

Meanwhile in Web2, the advent of large language models and generative AI content is disrupting the way content creators and consumers interact. “AI-powered” tooling does not explain where their answers come from; foot traffic and ad revenue does not reach the original proprietary data sets. The open internet could very well shrink, as data owners privatize their content for monetization.

Where does the Pyth Network fit into this cross-fire?

The Pyth contributors envision a world where smart contract developers, and builders across the Internet in general, can readily access market data upon its creation. The value of financial data—asset prices, recent trades, recent buy and sell information—rapidly erodes with time. Financial applications, DeFi or CeFi, are as valuable as the data securing their operations.

Past solutions of fetching, scraping, or duplicating publicly available data to pass to downstream blockchain users are not sustainable in a world where data privatization is the new norm. Even crypto trade data on CEXs—unusual in their open accessibility—is migrating behind paywalls.

As decentralized finance expands, and the traditional capital markets system begins adopting on-chain rails and tooling, the role of the data oracle becomes evermore paramount.

The Pyth Network serves more than 330+ applications across 55+ blockchains, has secured $300B+ in cumulative trading volume, and currently offers 500+ real-time price feeds across traditional and digital asset classes.

The drivers behind this growth: Pyth scales to where developers are, provides the data they need no matter where they choose to build, and does so without compromise to the reliability, precision, and latency needs of an audience that grew up in Web2.

The ways we behave online and on-chain are in flux: even so, the Pyth Network continues to secure the value we transact globally and power the applications we rely on. This blog post highlights the oracle network’s recent accomplishments and growth this past quarter.

Highlights

Who Isn’t Powered by Pyth?

Who isn’t Powered by Pyth these days? The Pyth Network secures one out of four DeFi protocols, according to the latest DefiLlama statistics. By the measure of the Pyth contributors, that percentage is much higher: more than 330 on-chain and off-chain applications rely on Pyth Data for their mission-critical operations.

The main drivers behind the adoption of Pyth Price Feeds: low-latencies updates, comprehensive asset coverage, and full-suite availability across all the chains where developers want to build.

Latency matters for precision and security. This has been a core tenet of the Pyth thesis since day one. Price updates every 400ms enable next-generation DeFi services.

Asset selection makes a world of difference for protocol founders too. Developers seek to offer the markets and services their users demand—from newly launched digital assets to more traditional instruments. Traders appreciate choice.

By extension, the full suite of 500+ Pyth Price Feeds are available on all Pyth-supported blockchains, meaning developers can tap into the markets their users enjoy, no matter where they choose to deploy.

The Banks are Joining Pyth

Pyth Network sources data from first-party sources and active market participants: traders, market makers, exchanges, and DEXs. By March 2024, the banking world started joining the Pyth Network mission too.

Nomura’s digital asset subsidiary, Laser Digital, has joined the Pyth data provider community to contribute its own digital and traditional assets price data to strengthen the oracle network’s data coverage. Laser Digital is the first from the banking world to not only join the Pyth Network, but also engage the Web3 world as a direct and live price data contributor.

The addition of Laser Digital to the Pyth data provider community is a significant milestone for TradFi and DeFi. The Pyth oracle offers a unique channel for the traditional banking sector to explore the on-chain world. In turn, the decentralized finance benefits from enhanced access to market data upon its origination—price data from time T(0).

New Pyth Product Launch: Entropy

Pyth Entropy, a new solution for on-chain random number generation for powering unpredictable outcomes, launched on EVM mainnet, including on Arbitrum, Blast, Chiliz Chain, Mode, LightLink, and Optimism.

While legacy solutions for on-chain RNG exists, they require strong trust assumptions or complicated cryptography. Pyth Entropy is based on a two-party commit-reveal protocol—a well-known protocol in the cryptography space for RNG. Entropy is designed to be easy to integrate, reliable, and responsive.

Entropy is positioned to secure a wide range of decentralized use cases: prediction markets and parimutuels, NFTs and generative art, social media and gaming, and more. Decentralized applications across gaming and entertainment chains have started integrating with Entropy, such as SlashToken on Chiliz Chain, and FLAP and Fungible Flip on Blast.

Pyth Councils Elected. Pyth Governance Reigns

Pyth Governance is responsible for important protocol parameters ranging from update fees to the reward distribution mechanism for data providers, as well as software updates to on-chain programs and how price feeds are listed on Pyth.

The Pythian Council and Price Feed Council are elected by the Pyth DAO, which will delegate specific powers and important actions to both councils.

The Pythian Council is made of eight members who are signers of the Pythian Multisig Wallet. Pyth Improvement Proposals (PIPs) which can be delegated to this council include upgrades to the oracle program, setting of data request fees per blockchain, along with other protocol or network fees, and more. The Pyth DAO Constitution explains the roles, powers, and procedures for governance.

On March 7, the Pythian Council members were elected and approved by the Pyth DAO. Members hail from Synthetix, HMX, Wormhole Foundation, Douro Labs, Solend, and the Pyth Data Association.

The Price Feed Council is made of seven members who will be signers of the Price Feed Multisig Wallet. PIPs delegated to this council can include managing the list of price feeds available through Pyth, the selection of data providers, the setting of the minimum number of data providers per price feed, and more.

On March 29, the Price Feed Council members were also elected and approved by the Pyth DAO. Members come from Synthetix, NOBI, Douro Labs, Swissborg, ReactorFusion, and the Pyth Data Association.

Operational Pyth Improvement Proposals are already being passed. Community members may stake their PYTH Governance Tokens in order to participate in on-chain governance and collectively help shape the network. Get involved today and make your voice heard!

Pyth Retrospective Airdrop: Phase 2

The first phase of the Pyth Network Retrospective Airdrop program was announced on November 2023. PYTH Tokens were distributed to over 90,000 wallets across 27 blockchains and 200 apps in this initial phase.

The second phase of the airdrop oversaw the distribution of PYTH Tokens to over 160 decentralized applications powered by Pyth Data. These protocols span the EVM, Cosmos, Rust, and Move ecosystems, and depend on Pyth to power their swaps, settlements, and transactions.

Readers may look forward to announcements from many of the contributors and founders behind these applications on how they plan to utilize their allocations.

Research by Douro Labs into Liquidation Fragmentation

DeFi does not have to be a dark forest, according to the contributors at Douro Labs in a research article series on MEV or “Maximal Extractable Value.”

Their first paper offers a taxonomy into MEV and dispels the idea that MEV is inevitable or necessarily opaque. In fact, MEV emerges from suboptimal protocol design due to the tradeoff between value capture and complexity. An examination into different MEV mitigation techniques reveals the need for a solution which mitigates complexity for both the protocol and searchers.

More specifically, the status quo in protocol design admits pain points for these two parties: liquidations typically leak value unnecessarily to miners; searchers must deal with fragmentation of liquidations between protocols.

You can find this research series and its developments here.

Pandemonium in the Discord

The Pythian community is entering a new golden era. The Pyth Discord is now home to more than 80K Pythians—an increase of 120% since January 1. All newcomers are welcome. Discord is the place to be for Pyth DAO members, for Pyth Governance, and for Web3 denizens to relax and share ideas with likeminded individuals.

The Pyth social channels are home to many regular events, from Poker Nights to Mindful Mondays. The Discord holds regular UFC Watch Parties, Gaming Hours, and other spectacles for all to participate. Community event ideas are always welcome. Don’t hesitate to let the admins know!

The Ecosystem in Numbers

The Pyth Network Today

Many have compared the Pyth ecosystem to an AirBnB model or Spotify streaming service for financial data: creators and owners of critical data can participate in the economics of the Pyth decentralized marketplace. Downstream users benefit from secure, direct access and, over time, a greater selection of assets to choose from.

Today, the Pyth oracle network sources data from market makers, proprietary trading firms, decentralized exchanges, centralized and traditional liquidity venues, and recently, investment banks and fintech players.

The data user side of the equation spans a vast array of DeFi primitives: decentralized exchanges, perpetual futures and derivatives, lending platforms, structured product vaults, stablecoin protocols, trading data analytics, decision intelligence solutions, and more.

The growth metrics below offer a helpful visualization of just how much the Pyth Network has grown this quarter and for the past year, from adoption to feature offerings.

Powered by Pyth

The Pyth Network stands at more than 330 identified integrations with Web3 and Web2 applications. This number indicates growth in users by at least 175% TTM.

“Identified” is a nod to the permissionless nature of integrating with Pyth Price Feeds. In line with the mission of Web3, any protocol can tap into Pyth’s price data without contacting a sales team. In other words, any application can become Powered by Pyth without letting the Pyth contributors know. Hence, the application integrations count is always a conservative estimate.

The On-Chain World United

The Pyth Network is the leader in this mission, serving 56 blockchains and ensuring continual, reliable access to hundreds of low-latency data feeds per chain.

Over the years, the Pyth contributors have found that smart contract developers share the same end vision for DeFi: a seamless experience which abstracts away the current complexities of liquidity fragmentation, blockchain interoperability, and service access.

Pyth’s cross-chain oracle approach equips DeFi apps to focus on delivering the best user experience, without having to worry about their choice of blockchain. This is a critical first step towards bringing DeFi to where it needs to be: mainstream, hidden, and powering what matters in our day to day.

Volumes at an All-Time High

Total volume secured by Pyth’s oracle data is another great metric for tracking usage and adoption. The beginning of April oversaw the Pyth Network exceeding $300B in cumulative volume secured over the oracle protocol’s lifetime.

March was an exceptionally active month for the Powered by Pyth applications, especially for the Solana, Arbitrum, Optimism, and Blast ecosystems. This month alone oversaw the Pyth oracle securing $87B in traded volumes.

Pyth Secured Value

Total Value Secured (TVS) is the oracle-powered subset of total locked value (TVL) for smart contracts. TVS tells mostly a story about lending and pool-based operations. In March, the Pyth Network surpassed $7.0B in TVS. The continual growth in Pyth-powered TVS shows both the resurgence of DeFi as the industry rushes into what feels like the next bull market, and increasing traction of Pyth Price Feed across DeFi outside of perpetuals and swaps.

Your New Oracle of Choice

Nevertheless, Total Value Secured (TVS) as a standalone metric does not indicate much about an oracle’s real growth due to the metric’s contextual nature. If TVL grows due to macro considerations, then the TVS for oracle should rise accordingly.

The Pyth TVS by L1/L2 chart above provides important additional framing: the Total Secured Value (oracle-powered TVL) for any blockchain offers another way for proxying oracle marketshare. Consider the chains where the Pyth Network dominates in TVS, from the Move realm (Aptos and Sui) to Cosmos (Sei, Injective, and Osmosis) to ZK chains like zkSync and Linea. In these chains, the Pyth oracle secures an overwhelming amount of locked value across applications, showcasing that Pyth is the oracle of choice for those these ecosystems.

Nevertheless, TVS only tells one side of the growth story. The Pyth Network’s low-latency and high-fidelity data capabilities makes it the oracle of choice for many derivatives applications—which often generate large volumes and do not sport large TVL metrics. For this reason, one can see more Pyth dominance across blockchains when looking at the percentage of trading volume secured overall for that chain at a snapshot in time.

The Traded Volume Secured by L1/L2 chart above highlights the DeFi ecosystems where Pyth is both a first-mover and the premier, if not only, oracle provider. In other words, there are blockchains where Pyth is the premier DeFi oracle enabling trading-based activity. One can see this dominance across the Cosmos and Move worlds, as well as high throughput alternative L1s and L2s such as Injective, Linea, Mode, and Fantom.

All of DeFi Calls on Pyth

The Pyth data providers stream price data to the Pythnet app-chain every 400ms. Whenever a user wants to consume a price update and verify its origination from Pythnet, they pay a small on-chain fee and pull that price to their environment for everyone to use.

The number of price update requests or pulls provides insight into the activity of the overall DeFi industry and for specific blockchain ecosystems. The graph above shows the number of average daily average price updates (DAUs) at approximately 3M updates. While oracle update fees are currently de minimis, Pyth Governance can vote to set both the size and denomination of these fees. Revenues generated by the Pyth protocol currently sit on-chain; collective governance will decide the next course of action.

Even More Data Feeds

The Pyth Network now offers more than 500 real-time price feeds across digital assets, foreign exchange pairs, metals, equities, and exchange-traded funds. More data feeds means more available markets and features for protocol developers to launch.

The community continues to request a number of exotic assets, including those not available on-chain. Price feeds for traditional assets such as energies, agriculture, and even treasury rates, for example, could unlock portfolio diversification strategies on-chain for sophisticated participants. The recent rise of liquid staking tokens (LSTs) and liquid re-staking tokens (LRTs) have taken protocols and blockchain go-to-market launches by storm.

Reach out and let the contributors know what data feeds you would like to see next.

We want to hear your feedback. Join the Pyth Discord and Telegram, and follow Pyth on X and LinkedIn. You can also learn more about Pyth here.