DeFi Revelations - RedStone Oracles

In this episode of Revelo Intel’s Twitter Spaces on August 16, 2024, Kirk hosted Marcin Kaźmierczak to discuss Redstone Oracle’s growth, their unique modular approach to oracles, upcoming integration with EigenLayer’s AVS, token launch plans, and more! Read our notes below to learn more.

Background

Kirk (Host) – Head of Business Development at Revelo Intel

Marcin Kaźmierczak (Guest) – Co-Founder and COO at RedStone Oracles

RedStone Oracles – modular Oracles delivering cost-efficient data for DeFi to EVM layer-1 and layer-2s

Redstone Oracles: Leading the Charge in Oracle Innovation and Growth

Kirk mentions Redstone’s plans for integrating with technologies like EigenLayer’s AVS and their upcoming token launch.
Marcin shares his background, detailing his entry into crypto in 2017 while writing his bachelor thesis on blockchain and Bitcoin. He recounts his first job in a crypto startup during the ICO boom, followed by a break from the industry before joining Google Cloud. In late 2020, Marcin co-founded Redstone Oracles with Jacob, an experienced software engineer and former smart contract auditor.
Kirk notes Redstone’s significant growth in total value secured in crypto, increasing from 1.3% to 2.7% in 2024. This growth positions Redstone as the fastest-growing Oracle in 2024 in terms of clients, supported chains, and total value secured.
Marcin explains Redstone’s unique approach compared to Chainlink, focusing on scalability through a modular design. He criticizes Chainlink’s monolithic design as unscalable, particularly when deploying on multiple chains. Redstone’s modular approach, with only one of four modules needing customization for different networks, allows for easier expansion and support for more sophisticated user requests.
Marcin highlights Redstone’s specialties, including proficiency in EVM networks, gas optimization, and expertise in yield-bearing assets and collateral price feeds. He mentions their early support for projects like Ethena and liquid restaking tokens, positioning Redstone as a leader in emerging asset classes.
Redstone’s team consists of about 70% engineers. Marcin highlights the importance of continuous innovation in product development, believing that a smaller business development and marketing team can work effectively alongside a strong engineering core.

Yield-Bearing Assets, Oracle Integration Models, and Oracle Extractable Value in DeFi

Kirk and Marcin discuss the importance of yield-bearing assets in DeFi, with Marcin highlighting how staking and restaking create new types of financial instruments unique to the crypto world.
Marcin explains Redstone’s three major integration models:
- The push model, similar to Chainlink’s approach, updates price feeds on-chain at regular intervals.
- The pull model (Redstone Core) delivers data on demand when needed by consumers, improving efficiency for volatile assets.
- The X model, designed for perpetual markets, addresses front-running issues by deferring execution until the next block.
Kirk asks about Oracle Extractable Value (OEV), which Marcin describes as a subsection of MEV. He provides an example using Morpho, a lending protocol, and Oval, an OEV capture tool. Marcin explains how this system allows users to bid for liquidation rights without MEV, potentially redistributing fees back to users or the protocol.
Kirk expresses interest in this approach as an alternative to token incentives for spurring growth in DeFi. He asks about the auction timeframe for liquidations and the parties involved.
Marcin differentiates between Ethereum mainnet and other chains when discussing OEV implementation. He notes that Ethereum’s longer block times (around 12 seconds) allow for a brief auction period, while faster chains like Arbitrum or Optimism require more performant solutions.
Marcin says that Redstone is developing OEV solutions for various EVM networks with different block times, acknowledging the complexity and chain-specific nature of these implementations.

Redstone’s Strategic Approach to Oracle Services and Institutional Engagement

Marcin explains that currently, OEV is focused on redistributing captured value to protocols to help them grow, with Redstone not taking a cut at present. However, he suggests that in the future, they might include a small tech fee or use it as a growth model to generate value in other business verticals.
Kirk asks abut Redstone’s overall business model. Marcin contrasts their approach with Chainlink’s, noting that Chainlink subsidized oracle services for growth, creating an expectation that oracles are almost free. He highlights the importance of managing both revenue and costs in a sustainable business model.
Marcin outlines three main revenue streams for Redstone:
- New ecosystems willing to pay for oracle services to attract developers.
- dApps using oracles, either on a per-request basis or through subscription models.
- Bespoke solutions for specific needs, such as creating price feeds for new tokens like EtherFi’s $eETH.
Kirk notes the importance of flexible oracle infrastructure to support the rapid expansion of yield-bearing assets across multiple chains and the proliferation of new L1s and L2s.
Marcin expresses respect for Chainlink’s role in enabling DeFi and their focus on institutions. He explains that Redstone is now ready to work with institutions following their $15 million Series A funding, which allows them to hire specialized staff for institutional sales cycles.
Marcin distinguishes Redstone’s approach from Chainlink’s: while Chainlink actively encourages institutions to move on-chain, Redstone is open to supporting institutions but doesn’t push them to adopt blockchain technology. He views Chainlink’s approach as beneficial for the industry’s long-term growth, pulling institutions into the blockchain space.

Redstone’s Market Strategy: Focus on AVS, Restaking Technologies, and Future Token Launch

Kirk and Marcin discuss Redstone’s strategic approach to market positioning and future plans. Marcin explains their interest in AVS and restaking technologies, noting that Redstone has been building on EigenLayer for six months and is exploring other platforms like Karak.
Marcin highlights that AVS and restaking are not Redstone’s initial go-to-market strategy but rather a way to enhance crypto-economic security and alignment as they scale to serve higher-tier clients. He outlines plans to implement AVS in their data aggregation model, focusing on data aggregation logic and slashing mechanisms.
Kirk asks about Redstone’s approach to balancing decentralization with performance. Marcin reveals plans to create two separate flows: one utilizing AVS for crypto-economic security, and another optimized for high performance to serve clients with different priorities.
Marcin discusses Redstone’s vision to become the market leader by creating the most performant, accurate, and resilient oracle ecosystem. He contrasts their approach with competitors like Chainlink and Pyth, highlighting Redstone’s focus on flexibility and performance optimization for emerging high-TPS chains.
Regarding Redstone’s token plans, Marcin indicates an imminent launch without specifying exact dates. He outlines potential utilities, including collateralization requirements for data providers and the ability for token holders to delegate to providers. Marcin mentions plans to integrate the token with restaking technologies, noting that final specifications depend on the mainnet launches of platforms like EigenLayer.
In closing, Marcin highlights Redstone’s pragmatic approach to oracle development, balancing decentralization with market realities and evolution. He stresses the importance of finding a middle ground between full decentralization and centralization, aiming to support market expansion while maintaining the ecosystem’s core values.

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Show Information

Medium: YouTube (Video)
Show: Revelo Intel
Show Title: RedStone: A Rising Star in the Oracles Game!
Show Date: August 16, 2024