Introducing Pyth Network: The largest and fastest growing first party Oracle

What is Pyth Network?

With the strict control over live and historical price feeds by traditional markets, the access to financial market data has been restricted to a limited number of organizations and individuals. Pyth, a ground breaking blockchain oracle, aims at the elimination of the problem of limited financial data access. In other words, the Pyth Network is a decentralized oracle network that focuses on the provision and dissemination of high-fidelity, real-time financial data to Defi applications.
Pyth Network sources its data from over 90 first-party data providers, including some of the biggest exchanges and market makers. Since April 2021, the contributors of Pyth Network have been working to provide Web3 developers with hundreds of real-time price feeds. “The Network offers real-time price feeds for crypto currencies, equities, foreign exchange pairs, ETFs, and commodities to smart contract developers and more than 40 blockchains (according to pyth.network).”

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How does it work?
With the ‘scarcity’ and difficulty in the attaining of financial market data — as discussed briefly in the introduction, the question of : “how does the Pyth Network gather their priced data and how accurate are these data,” comes to mind. To answer these questions, two key segments must be dissected:
The Protocol Participants (source and sustenance)
The governing Mechanism and Structure.

The Protocol Participants
Publishers (source):
With the Pyth Network’s ecosystem centered on the provision of valuable financial market data to the general public, there is the barrier of getting those data. In the effort to bypass this blockage, the network adopts a reward system. This involves the process of incentivizing market publishers (source), the few individuals with access to market data. The network then aggregates this first-party price data and publishes it on-chain for use to either on or off-chain applications. The publishers includes trading firms, market makers and exchanges — they are all allocated a set figure as reward (Pyth’s native token, PYTH, is used for all payments) for the data provided.
• Consumers (sustenance):
Now, in order for the network to remain active in its data retrieval (from the participants), there is a constant price feeds update. The consumers (sustenance) play a huge role in making this possible. From the payments of gas fees for each data used, to being solely responsible for invoking the permissionless price updates (pulling the price update on chain before using the price), the consumers — who are typically users of on-chain protocols that integrate Pyth for market data— serves as a pivotal source of funding, as their gas fees are used for incentivizing the publishers and then the availability real time updates of price fees are made possible through their use of the financial data provided.

The Governing mechanism and structure
• Price aggregation:
With the possibility of a reward, and with Pyth network keeping its role as a publisher for their network free and open to individuals, price aggregation tackles the concerns of: price manipulation, impersonation of publishers and reporting of false data. Pyth aggregates prices through its own “confidence interval”. For example, if one data source provides a price or $100+/- $1, and another publisher reports a price of $100+/-, Pyth aims for a total price closer to $101 rather than $110 and the overall confidence interval should reflect the variation between publisher prices.

• Pyth Governance:
Involves an on-chain governance that is charged with overseeing high-level parameters of the other mechanisms. Their tasks involves:
Overseeing the reward distribution mechanism for publishers
Overseeing how publishers will be permissioned to provide data for price feeds
Overseeing the size of update fees
Overseeing other software updates to on-chain programs across blockchains
Overseeing how products are listed on Pyth and their reference data