THORChain Enshrines Oracles, Altering the Dynamics of Decentralized Finance (DeFi)

In a move that could significantly alter the dynamics of decentralized finance (DeFi), THORChain has rolled out its “Enshrined Oracles.”

In a move set to significantly alter the dynamics of decentralized finance (DeFi), THORChain has launched its “Enshrined Oracles.”

Announced via X (formerly Twitter), THORChain's post explained the step-by-step mechanism powering the new oracle system, designed to ensure fairer and more reliable on-chain pricing.

Integrating this functionality directly into its base layer, THORChain aims to reduce systemic vulnerabilities and strengthen its resistance to manipulation.

What Are Enshrined Oracles?

Enshrined Oracles are a native pricing solution integrated into THORChain's core protocol. Unlike traditional DeFi platforms that rely on external oracle services like Chainlink or Band Protocol, THORChain now sources, calculates, and verifies market prices within its own network.

This development is a strategic move to reduce manipulation, minimize third-party dependencies, and increase the protocol's long-term resilience.

How the Oracle System Works

The process behind THORChain's Enshrined Oracles involves several key steps:

Each THORNode fetches price data for five different centralized exchanges. The exchanges are selected based on volume and reputation to ensure good quality data.

After fetching the data, each node calculates a volume-weighted average price. This gives greater weight to prices from high-volume exchanges, making the result more reflective of actual market conditions.

Outlier prices that deviate significantly from the average are excluded automatically. This prevents errors and protects the network from manipulation attempts.

Each node signs its final price and shares it with other nodes through a peer-to-peer gossip protocol.

Once a supermajority of nodes agree on the price, it is written to the blockchain. This happens every block, ensuring prices remain up to date and accurate.

Accountability and Security Measures

To enforce integrity, the protocol has implemented strict slashing conditions. Nodes that fail to report pricing data or consistently report outliers will be penalized, while those who deliberately submit false data risk being slashed — a mechanism that seizes a portion of their bonded funds.

This system incentivizes honest behavior and technical diligence, aligning node operators' interests with the protocol's integrity.

By embedding pricing into its own consensus layer, THORChain avoids the single points of failure associated with third-party oracle services.

A Step Toward Protocol Sovereignty

The move to enshrine oracles can be seen as a broader step toward protocol-level self-reliance. It represents an ideological pivot away from reliance on modular or plug-in infrastructure toward fully native, vertically integrated systems.

This mirrors a growing trend in DeFi where protocols are seeking to internalize critical components to improve security and performance.

Looking Ahead

As THORChain levels up its core layer, it has invited the community to weigh in on what should come next at the protocol level. Questions around staking mechanics, liquidity incentives, and expanded asset support remain open.