Umbrella Network Architecture

Umbrella Network is a Layer-2, community-owned, decentralized oracle solution. Umbrella leverages a decentralized network of validators to fetch, calculate and obtain agreement on the feeds off-chain.

A key problem with most of the current oracle solutions is that their entire logic, storage, and transmission works on the Layer-1 itself. This means that every data point is processed as a different transaction, with the costs quickly adding up and making practical usage prohibitively expensive or even infeasible. For example, the largest Layer-1 Networks - Bitcoin and Ethereum - cannot handle more than 20 transactions per second. The transaction throughput is so low that it is impossible for oracles to be comprehensive on just Layer-1.

This is why Umbrella Network is designed with an off-chain architecture to scale its decentralized oracles. This makes our oracles faster, more authentic, and cryptographically verifiable. It also allows us to offer very comprehensive data points at a cost that is a small fraction of a Layer-1 transaction. Let's take a look at how Umbrella achieves all of this.

Faster: Umbrella's Layer-2 network ensures that Umbrella Network can process transactions much faster than other oracles.

More authentic: Umbrella has a consensus system where validators check for the authenticity of data.

Cryptographically Verifiable: A cryptographic proof is appended to every data point so that it cannot be tampered with, even after it has been received by smart contracts.

Affordable: Layer-2 network ensures that data is at-least 1/20th of the cost of a fully Layer-1 solution.

More Comprehensive: Being faster and inexpensive enables us to process more data points. This makes the data offered by Umbrella Network fresher and encompass the long-tail and mid-tail data points.

Consensus

Consensus is the process by which the decentralized network of validators agrees on the right value for a given feed.

Following a round-robin mechanism, validators are elected as leaders of the consensus. A leader is responsible for gathering the feeds that must be fetch, fetching the value for those feeds from various Data Providers and identifying the correct value for each feed.

After doing this, the leader present the feeds to the other validators, which in turn perform the same steps as the leader, and if the values obtained are withing a predefined threshold, provide their approval to the feed.

Only those feeds with enough approvals are accepted in the Oracle.