The Thales protocol allows for the formation of and participation in peer-to-peer parimutuel markets on Ethereum. Born out of the Synthetix ecosystem, Thales leverages Chainlink Data Feeds, trustless order books, and the sUSD stablecoin to provide participants with a novel on-chain, permissionless, and non-custodial way to access parimutuel markets backed by high-quality data.
Thales built a novel DeFi protocol enabling users to create, trade, and exercise binary options covering various markets.
Thales needed access to high-quality, real-world data to accurately settle its binary options markets.
Chainlink Data Feeds provided Thales with the high-quality, tamper-proof data it needed to create and accurately settle new prediction markets.
Decentralized finance (DeFi) has been surging in popularity as users seek to take advantage of the enhanced truth guarantees offered by transparent, permissionless financial applications. The space is rapidly approaching nearly $300B Total Value Locked (TVL), a number representing the sum of assets deposited in various DeFi protocols. As more real-world data is brought on-chain, more next-generation DeFi applications are being built that aim to offer users the performance of Web 2.0 applications in combination with the global, open-source, and trustless features of Web3.
Thales is a binary options protocol built on Ethereum initially designed by Synthetix core contributors and funded by the Synthetix DAO. The Thales protocol is named after the ancient Greek philosopher Thales of Miletus, who became one of the first known people to exercise an option contract by cornering the olive market. In the summer of 2021, Thales completed a $2.5M strategic round and began its mission to redefine binary options trading on blockchains.
Thales has featured more than 60 binary options markets around a plethora of assets that are supported by Chainlink Data Feeds. In binary options markets, users predict which events will occur based on two possible outcomes. For the most part, binary options protocols in the blockchain space typically focus on outcomes around the price of assets; for example, “Will X asset hit Y price?” Rather than follow the trend, Thales wanted to set itself apart from other binary options protocols by creating markets around real-world events, such as the Olympics. However, to do so, Thales would need access to highly secure real-world data, which is difficult to find in the blockchain space.
Unlike traditional Web 2.0 systems, Web3 blockchain applications have difficulties natively accessing real-world data—an issue commonly referred to as the oracle problem. Thus, developers require a middleware solution known as a blockchain oracle to securely bring real-world data on-chain. However, oracle networks differ in many ways, including in the variety of data sources they offer, the number of nodes securing each network, their reliability and performance, whether they are centralized or decentralized, which blockchain they can interact with, and so on. Since oracle networks are highly complex infrastructure, it was not realistic for Thales to create their own oracle solution as this would divert significant developer resources and require constant maintenance.
When the Thales team began reviewing oracle solutions, they quickly realized that many oracles do not offer the premium data sources they require and cannot manage API keys and logins. Also, since decentralization is a core feature of Thales’ binary options protocol, it needed to integrate a decentralized oracle network that matched its high standards and was resistant to single points of failure. Finally, the Thales team desired a transparent oracle solution with a performance history users could verify to confirm that binary options markets were settled using accurate data.
“What many traditional developers don’t realize is that blockchains are largely isolated from the real-world data they’re used to using in their Web 2.0 applications. Finding the right oracle solution is crucial since a smart contract application is only as secure as its data inputs.”
Thales integrated Chainlink Data Feeds to bring high-quality, real-world data to its protocol, enabling novel binary options markets triggered by external events. Since Chainlink nodes can securely manage API keys and account logins, Thales could access the premium APIs it needed to build unique markets. Another benefit of Chainlink Data Feeds is that they are decentralized at the data source, oracle node, and network levels, matching Thales’ commitment to decentralization while eliminating single points of failure. Moreover, a suite of services, including market.link and reputation.link, allow anyone to verify the performance of oracle networks in real-time, helping assure Thales users that the data triggering their markets is highly accurate and reliable.
Supported by Chainlink Data Feeds, Thales built markets around Olympic medal rankings for the 2020 Summer Olympics. Chainlink oracles reported the total medal rankings sorted by total gold medals, and Thales’ market then offered payouts for users who predicted which countries would land in the top five of the total medals ranking. To ensure data accuracy, the Chainlink Labs team—one of the many teams building the open-source Chainlink Network—worked with a number of sports data providers that offer Olympics results to major broadcasters, including Sports Data IO, The RunDown, and Enetscores. Thales was even able to backtest its data against the 2016 Summer Olympics to confirm that the data sources were legitimate prior to their integration.
Thanks to Chainlink Data Feeds, Thales was also able to build binary options markets around the amount of ETH burned after the Ethereum London hard fork. To make this happen, Chainlink Labs worked with a number of data providers to collect the on-chain metrics needed to compute the cumulative number of ETH burned daily. For enhanced security and reliability guarantees, the Thales team was also able to successfully test the ETH market before launching it on mainnet. Not only were the Olympics and ETH markets a success, but they also proved that as more real-world data comes on-chain, more opportunities are unlocked for developers to build more advanced applications.
“Working with the Chainlink Labs team was a great experience—I can honestly say this is the most organized group I’ve ever seen. They are very professional and are always available to answer questions. On a number of occasions, they even reached out proactively. I love how they never give ‘no’ as an answer and always try to look for mutually beneficial solutions.”
Chainlink Data Feeds are now a fundamental component of Thales’ binary options markets. Since integrating Chainlink Data Feeds, Thales has showcased the true potential of immutable sources of truth and demonstrated the smart contract development possibilities unlocked by building with them.
Thales users had the privilege of being among the world's first to get exposure to various novel markets provided with the help of high-quality data from Chainlink Data Feeds. These new parimutuel markets were a big point of interest among the DeFi community, which ultimately helped bring more users to the protocol. Chainlink Data Feeds also saved the Thales team significant development resources, as they were not required to design, build, and constantly maintain their own oracle network or work out how to access hard-to-find, premium datasets. Through a single integration, Thales is now able to easily connect to any new Chainlink Data Feeds it needs to continue pioneering novel binary options markets, enabling a more meaningful experience for its user community as the protocol scales to layer-2 platforms.