What is Pyth Network (PYTH)?

The field of decentralized finance (DeFi) is opening the door to a whole new world by blending the capabilities of traditional financial systems with the transparency and ease of access offered by blockchain. But at the heart of this transformation lies a crucial issue: the blockchain's ability to connect with external data. This is precisely where oracle systems come into play. Pyth Network stands out with its unique and innovative approach. So, what is Pyth Network? And what is its token, PYTH coin? Let's answer all your questions in this detailed guide.

Definition and Origins of the Pyth Network

For DeFi ecosystems to function effectively, decentralized oracle systems that can seamlessly transfer dynamic external financial information, such as stock market prices, exchange rates, or commodity data, to the blockchain are necessary. For smart contracts to be functional and reliable, they must securely access this external data. Blockchains are inherently limited to their own internal data; they cannot directly access external data such as prices and interest rates. This demonstrates the need for an interconnectivity to implement complex DeFi solutions, particularly those involving lending, derivatives, or synthetic assets. This is where oracles come into play, bringing this data onto the chain and enabling the automated execution of smart contracts based on real-world conditions. Without this connectivity, DeFi's reach would be significantly limited, making it virtually impossible to offer the same complex products offered by traditional finance. Therefore, oracles are a fundamental building block for the growth and development of the DeFi world.

The Pyth Network stands out as a first-party oracle network that receives data directly from powerful industry players such as exchanges, market makers, and financial services firms. Unlike traditional oracle systems, it aggregates data from multiple independent sources rather than a single source. This both enhances security and eliminates the risks associated with data coming from a single source.

One of the most striking aspects of Pyth is that it receives data directly from financial institutions. While traditional oracles typically pull information from third parties like CoinMarketCap or CoinGecko, additional layers are added, which can lead to latency or data accuracy issues. Pyth, however, takes the data directly from the source; it comes directly from the markets. This makes the data both faster and much more reliable. Furthermore, the institutions providing the data contribute to the system by risking both their own reputations and the tokens they deposit into the network. This makes data manipulation extremely difficult. This structure is particularly advantageous for applications like high-frequency trading or lending protocols, where even seconds matter.

Pyth is a network that directly provides data to over 120 major players, including giants like Jane Street, CBOE, Binance, OKX, and Bybit. This allows applications to directly access highly accurate, low-latency, and detailed data from these institutional sources.

Pyth Network History: Key Milestones

Despite its short history, Pyth Network has evolved rapidly and achieved significant milestones in the DeFi world:

• 2021: First integration and data stream launched on Solana: This year, Pyth Network emerged within the Solana ecosystem and began providing its first data streams. Solana's high-performance architecture played a key role in Pyth achieving its goal of providing real-time data. During this period, despite its relatively new nature, Pyth signaled its potential to make a significant difference in the industry by directly receiving data from first-party data providers (exchanges and trading firms). Initially, price data for key crypto pairs such as BTC/USD and ETH/USD began to be provided. This paved the way for DeFi protocols to access more reliable and up-to-date price information.
• 2022: Connecting to other chains via wormholes: In 2022, Pyth Network signaled that it would not be limited to Solana. This year, a critical step was taken to migrate Pyth data to other blockchains: the integration of the Wormhole bridge system. Wormhole is a decentralized platform that enables asset and data transfer between different blockchains. Using this technology, Pyth began migrating its data to Ethereum, BNB Chain, Arbitrum, Avalanche, and many other EVM-compatible chains. This development exponentially expanded Pyth's usability, making it a truly multi-chain oracle solution. DeFi applications across different blockchains could now also benefit from Pyth's reliable and low-latency data. This expansion increased Pyth's overall impact and importance within the ecosystem.
• 2023: PYTH token announced and airdrop completed: Embracing the importance of decentralization and community governance, Pyth Network announced its native cryptocurrency, the PYTH token, in 2023. This announcement was a significant step in the project's decentralization journey. The PYTH token was designed to be used in the governance of the network, giving token holders the right to vote on the future of the protocol. The launch of the PYTH token was supported by a large-scale airdrop process. This airdrop was distributed to early adopters, data providers, and other stakeholders in the ecosystem who contributed to the development of the Pyth Network in various ways. The Pyth airdrop aimed to encourage community participation and make token distribution more decentralized. The launch of the PYTH token allowed the project to adopt a more transparent and community-focused structure.
• 2024: Became one of the largest oracle networks, active on over 40 networks: By 2024, the Pyth Network continued its growth and experienced incredible expansion. Active on over 40 different blockchains at the beginning of the year, Pyth quickly became one of the largest oracle networks. Today, this number has surpassed 100! This success has proven the validity of Pyth's multi-chain strategy. DeFi protocols, NFT platforms, games, and other Web3 applications across various ecosystems have become dependent on Pyth's real-time, reliable price data. This expansion demonstrates that Pyth has moved beyond being a mere oracle and has become a critical component of the entire Web3 data infrastructure. With its diverse data feeds (including stocks, commodities, forex, cryptocurrencies, etc.), Pyth has become one of the most comprehensive financial data providers in the market. This bodes well for the future of PYTH.

Why Is the Pyth Network Valuable?

We now know what the Pyth Network is, how it emerged, and its place in the oracle world. However, it's worthwhile to elaborate on why this structure is so important, and why it's so highly valued, particularly in Web3 and traditional finance. Today, DeFi applications gain meaning not only with on-chain code but also with real-world data. Many processes, such as the accuracy of real-time price data, rapid liquidations, and the current values of synthetic assets, depend on the health of the oracles running in the background. This is precisely where the Pyth Network stands out: It retrieves data directly from the source, ensures high accuracy without compromising decentralization, and can present this simultaneously across dozens of different chains. Now, let's take a closer look at the details that make Pyth so special.

It provides real-time price data (stocks, commodities, forex, cryptocurrencies, etc.)

What makes the Pyth Network so special isn't just what it does, but how it does it. One of the greatest needs in the DeFi world is accurate and instant price data. The reliability of this data is fundamental to transaction protocols. Pyth Network isn't limited to cryptocurrencies; it also sources data from traditional markets like stocks, commodities like gold and oil, and foreign exchange rates. This makes it indispensable for many applications, including decentralized exchanges, lending protocols, and synthetic asset platforms. Pyth's low-latency data makes a significant difference, especially in situations where timing is crucial, such as evaluating arbitrage opportunities or ensuring the proper operation of liquidation mechanisms.

Provides reliable and low-latency data flow to decentralized applications

Another strength of Pyth is that it receives data directly from the source—that is, from actors like exchanges, market makers, or large financial firms. This eliminates the need for additional data aggregators, making data both faster and more reliable. Furthermore, thanks to Pyth's "pull oracle" structure, applications can pull data onto the chain themselves when they need it. This minimizes latency and prevents significant losses. This is one of the most important elements underlying the Pyth oracle's functionality.

Off-chain data providers directly participate, increasing accuracy

The Pyth Network has over 100 major data providers. Each one sends its own price information to the network, along with a "confidence interval" indicating how reliable that price is. Pyth then aggregates this data into a single price feed. This way, even if a single source provides inaccurate data, the overall accuracy of the system remains intact. Furthermore, data providers risk losing their staked PYTH tokens if they provide inaccurate information, encouraging them to be more vigilant and honest.

Multi-chain oracle solutions offer broad adoption.

Running on Solana, Pyth is currently deployed on over 100 blockchains. Its wormhole landscape makes it active on Ethereum, Arbitrum, Optimism, Avalanche, BNB Chain, Polygon, and many more. This makes Pyth a powerful infrastructure for decentralized applications across multiple chains.

Today, Pyth's more than 1,300 price charts can operate with the same quality across more than 100 blockchains. In addition to large networks like Solana and Ethereum, they can also be saved in ecosystems like Optimism, zkSync Era, Base, Aptos, Sui, NEAR, and Cosmos. This broad compatibility offers great freedom for developers. A separate oracle will be registered for each chain, allowing them to move forward with a single solution that operates with the same performance everywhere. For example, one might prefer Solana's members and the other Ethereum's: if Pyth is closed, it provides the same quality data to both, allowing those in between to live.

The PYTH token plays a central role in the ecosystem.

The PYTH token, the native cryptocurrency of the Pyth Network, plays a crucial role in the network's operation. It provides a voice in governance and influences pricing for data providers. In other words, it's not just a technical detail; it's a unified platform. One of the most fundamental uses of the PYTH token is its management. Token holders can stake their PYTH tokens and become part of the Pyth DAO, voting on decisions that shape its future. These decisions include who will be listed, how prices will be set within the protocol, how much will be paid to data providers, and even approving software updates. In short, PYTH holders directly influence how the protocol operates.

On the Pyth Network, it's crucial for data providers to provide accurate and reliable data. This is achieved through a system called "Oracle Integrity Staking." Data providers stake a certain amount of PYTH tokens to contribute to the network. If someone submits false or manipulated data, a portion of their staked tokens is slashed by the system. This system rewards those who provide accurate information and penalizes malicious behavior. Furthermore, token holders can support data providers they trust by delegating their PYTH, making the network more secure and robust.

Pyth's plans include allowing data consumers to pay with PYTH to use oracle services. While not yet active, this is a development that could increase the token's value by providing a new use case.

The total supply of PYTH tokens is 10 billion. According to the project's whitepaper, this supply is distributed among various stakeholders in varying proportions:

• Publishers: 23.29%
• Ecosystem Growth: 22.92%
• Protocol Development: 22.75%
• Private Sale: 16.89%
• Community and Early Contributors: 14.15%

This last portion also includes airdrops to early community members and Pyth contributors.

These tokens weren't released all at once. There's a distribution (vesting) plan that gradually unlocks them. The first release took place six months after the token launch. The remaining tokens were or will be released gradually over the 18th, 30th, and 42nd months. This prevents a sudden surge in supply in the market.

PYTH's Working Principle

The core operation of the Pyth Network is based on an innovative architecture that differs from traditional oracle solutions. This architecture aims to optimize both data quality and cost-effectiveness.

The oracle model used by Pyth is one of the most significant differences that distinguishes it from traditional systems. Many oracles use the "push" model. In this system, price data is sent to the chain at regular intervals. Whether the application uses that data or not, on-chain gas fees are paid for each update. Especially if there are hundreds of different price streams and frequent updates, this can be both expensive and unsustainable for the system. Pyth, however, completely reverses this approach and adopts the "pull" model. In this system, data is only called onto the chain when needed. In other words, if a user or application requests price data, it is pulled onto the chain immediately. This way, gas costs are incurred only when needed, eliminating the need for unused data. This solution is both more economical and prevents unnecessary load on the chain.

Pyth achieves this through its off-chain service called "Hermes." Hermes stores the most up-to-date price data and activates when the application wants to pull it. This allows applications to first update the data and then execute the transaction logic in a single transaction. This structure is both more efficient and less expensive for the user.

Additionally, the "pull" model allows for much more frequent updates than "push" systems. In the Pyth example, this time is only 400 milliseconds! This means instant access to low-latency data. Furthermore, Pyth's architecture performs very well not only on chains with high gas fees like Ethereum, but also on fast chains like Solana.

Supported blockchains and runtimes: Universal access

One of Pyth's biggest advantages is its ability to deliver over 1,300 price streams with the same performance across more than 100 blockchains. This means that whether you're running on Solana, EVM-based networks like Ethereum or Arbitrum, or one of the Aptos, Sui, NEAR, or Cosmos ecosystems, Pyth data is available with the same quality everywhere.

This allows developers to easily scale their applications to different chains. There's no need to look for Oracle integration to migrate to a new network, as Pyth is already built in. This not only simplifies things but also provides significant time and cost advantages for DeFi projects. For example, a developer might want to leverage the speed of Solana and the security of Ethereum. The consistent and reliable data streams offered by Pyth make these transitions or multi-chain use cases seamless.

Pyth's "same performance, every stream" approach both improves the user experience and supports the overall growth of the DeFi world. In this respect, Pyth is becoming not only a data provider but also a strong infrastructure partner for blockchain projects and a tool that simplifies the development process.

Who is the Founder of Pyth Network?

The team and organization behind Pyth Network are crucial to the project's reliability and robustness. Rather than focusing on a single founder, Pyth was developed through a consortium and an open-source community approach.

Pyth Network was initially developed under the leadership of Jump Crypto. Jump Crypto is a research and development firm focused on quantitative trading and infrastructure development with deep experience in both traditional financial markets and the Web3 ecosystem. They played a key role in shaping Pyth's initial vision and establishing its initial infrastructure.

The team working on Pyth at Jump Trading was restructured as Douro Labs in July 2023. Douro Labs was founded by Michael Cahill, Jayant Krishnamurthy, and Ciarán Cronin. In addition, the governance of the Pyth Network is handled by the decentralized, autonomous organization called the Pyth DAO. The Pyth DAO provides PYTH token holders with voting rights in governance processes. PYTH token holders can influence the future development of the network by staking their tokens. This means they have the power to vote on matters such as listing new data streams, determining fee structures, setting data provider rewards, and protocol upgrades. This structure transforms Pyth into a community-driven and truly decentralized protocol.

The Pyth Network's core infrastructure and codebase are open-source. This means anyone can review, audit, and even contribute to the code on Pyth's GitHub repositories. Thanks to its open-source nature, vulnerabilities can be identified more quickly, and it is continuously improved with innovative ideas from the community. This transparency and community participation are critical to the project's long-term sustainability and security.

Frequently Asked Questions (FAQ)

Below, we've answered a few frequently asked questions about the Pyth Network (PYTH) and the PYTH coin:

• What is the Pyth Network and what does it do?: The Pyth Network is an oracle network designed for decentralized finance (DeFi) applications, providing real-time financial market data. Its goal is to provide reliable and accurate price feeds to blockchain-based applications, enabling the development of more complex and secure DeFi products. The network aggregates high-frequency financial data directly from first-party sources and bridges this data to various blockchains.
• What does the PYTH token do?: The PYTH token is the native governance token of the Pyth Network. Token holders have a say in the decentralized governance of the platform by voting on the future development of the network, fee structures, and other important parameters. Additionally, in some cases, PYTH tokens can be staked by data publishers to provide data of a certain quality.
• What's the difference between Pyth and Chainlink?: Both Pyth and Chainlink are oracle networks that provide data to blockchains, but their key differences lie in their data sources and architecture. While Chainlink typically uses aggregated data sources to provide a broader range of data, Pyth collects high-frequency data directly from first-party financial institutions (trading firms, exchanges, etc.). This makes Pyth particularly well-suited for real-time, high-precision financial data.
• Where does Pyth get real-time prices?: The Pyth Network receives real-time price data directly from first-party financial institutions. These data providers include leading trading firms, market makers, and exchanges. This approach aims to increase the accuracy and reliability of data because the data is generated and published directly at the source.
• Which chains can it be used on?: The Pyth Network is designed for use on a variety of blockchains and layer-2 solutions. Supported chains include Solana, Ethereum, BNB Chain, Avalanche, Polygon, Arbitrum, Optimism, and many other EVM-compatible chains. This broad integration allows Pyth to provide price data in various DeFi ecosystems.
• How to buy the Pyth token?: The PYTH token can be traded on various centralized and decentralized cryptocurrency exchanges. You can find the PYTH token on major centralized exchanges such as Binance, Kraken, KuCoin, and Bybit, as well as decentralized exchanges like Jupiter (in the Solana ecosystem). To purchase the token, you must first register on one of these exchanges and fund your account.

Before investing in real-time and reliable data infrastructures in the Web3 world, discover how the Pyth Network works with the JR Kripto guide.