Back to School Time for ‘Smart Contracts’ – Oraichain Fundamental Analysis

The irony is not lost on those that have learnt the ins-and-outs of smart contracts that, in many ways, they are not particularly smart.

Smart contracts operate in an isolated environment and cannot directly access external data from the real world (e.g., financial data, weather information, etc.). While this is touted as a feature, and not a bug in regards to operating on networks that have raised the bar for security in comparison to their Web 2 counterparts, this limitation hinders their ability to perform tasks that require real-time information.

In essence, smart contracts are designed to execute simple, deterministic logic. They struggle with complex computations, particularly those involving AI and machine learning algorithms, due to the constraints of the blockchain environment. Moreover, once deployed, the code of a smart contract is immutable, meaning it cannot be changed. While this ensures security and trustlessness, it also means that bugs or vulnerabilities discovered post-deployment cannot be easily fixed.

As we well know, the execution of smart contracts on blockchains can be slow and expensive, especially when dealing with high transaction volumes. This can limit their efficiency and scalability for more extensive and complex applications. While smart contracts can automate agreements and enforce rules, verifying the correctness of external data or computations they rely on can be challenging, leading to potential trust issues.

The advent of Chainlink pushed the envelope in terms of enabling smart contracts to integrate with oracles powered by Application Programming Interfaces (APIs), use cases of which we have covered extensively throughout the CCI Fundamental Analysis series. Chainlink excels in providing secure and decentralized data feeds, however a smart contract can only action data received from an API within strict parameters coded into the Smart Contract. In this sense, while Chainlink oracles are of immense importance to the broader cryptocurrency ecosystem, they are reactionary in nature given they only execute when data received from the API meets conditions within a smart contract.

In light of this, it stands to reason that the next evolution of Smart Contracts will enable them to become proactive rather than reactive.

It is becoming increasingly apparent that AI is set to usher in the next evolution of Smart Contracts, and in the spirit of exploring the possibilities of AI taking the Smart Contract functionality, and by extension the user experience (UX) to the next level, we touch on Oraichain.

At a sky-high level, Oraichain aims to address the limitations of centralized AI systems by offering a blockchain-based framework that ensures transparency, security, and verifiability in AI computations and data management. In this fundamental analysis, we deep dive into Oraichain’s technology stack that merges blockchain with AI, use cases for AI enabled smart contracts, $ORAI tokenomics, and we will discuss where Oraichain sits in the increasingly competitive AI landscape that is undoubtedly set to usher in capabilities beyond our imaginings.

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