For more information, visit the Pyth whitepaper
Growth in DeFi requires high-fidelity, time-sensitive, real-world data, direct from the source and made available on any L1 blockchain. Financial market data, however, is often accessible to only a limited set of institutions and users. Traditional markets typically maintain strict control over and access to both live and historical price feeds. Consequently, only a selected group of users has access to the most timely, accurate, and valuable information.
The Pyth network is a next-generation oracle solution that aims to bring this valuable financial market data to the general public. The network does so by incentivizing market participants — trading firms, market makers, and exchanges — to share directly on-chain the price data collected as part of their existing operations. Pyth's data providers include some of the largest traders, exchanges, and financial services players who create unique high quality market data. This includes real world market data in equities, fx, crypto, and metals with ambitions to scale across asset classes. Data publishers include Jump Trading Group, GTS, Jane Street, Hudson River Trading, LMAX, Virtu, BSX, CTC, and many more.
The network then aggregates this first-party price data (still on-chain) and makes it available for use by either on- or off-chain applications.
End-users of Pyth data can elect to pay data fees to gain protection against a potential oracle failure. As data publishers must stake tokens in order to publish data for a product, the stake of at-fault publishers (if they make the aggregate price erroneous) will be used as a payout to those end-users voluntarily paying fees. Delegators choose which product (price feed) and a publisher to stake on top of in order to earn data fees (or lose their stake if the oracle is inaccurate due to publisher faults). Initially, 80% of the data fees will go to delegators while the remaining 20% will be shared among publishers — this, among other parameters, will be subject to change through a PYTH governance.
The goal of the design and mechanics around the PYTH token aim to make the Pyth network self-sustaining and decentralized.