What is Pyth?
Pyth Network is a decentralized oracle (essentially, a service that connects blockchains to real-world data) that brings real-time financial metrics, such as stock, crypto and commodities prices, onto blockchains.
Launched initially on Solana in 2021, Pyth’s mission is to make high-quality data accessible for blockchain applications, especially decentralized finance (DeFi), where accurate data feeds are essential for pricing assets and preventing mispriced trades.
Unlike some oracles that pull data from multiple intermediaries, Pyth sources data directly from top-tier financial institutions, including exchanges and trading firms, which improves both speed and reliability in its data feeds.
How Pyth Network transforms real-time data feeds
Pyth Network is updating how blockchain systems access real-time market data by linking directly to high-quality sources like trading firms, major financial institutions and exchanges.
Instead of relying on intermediaries, Pyth pulls asset prices directly from first-party providers, including firms from both traditional finance and crypto markets. This gives decentralized applications (DApps) access to accurate, low-latency pricing information, crucial for tools like lending platforms, trading protocols and asset tokenization systems.
What makes Pyth stand out is its commitment to reliability and accuracy. Unlike many oracles, Pyth uses a unique data aggregation process, taking multiple data points from providers and creating a single, reliable price feed that is resilient to fluctuations or manipulation. This is critical in DeFi, where any delay or inaccuracy in price data can lead to issues such as liquidation errors in lending protocols or arbitrage opportunities that damage markets.
Did you know? Pyth Network publishes data feeds on its own blockchain, Pythnet, which enhances transparency and security within the blockchain oracle space.
How Pyth Network provides accurate crypto data
Pyth Network’s accuracy is driven by a strong verification process and aggregation model that make use of its large network of data publishers.
Each data provider, from trading platforms to financial entities, sends asset prices to Pyth, along with a confidence interval — an indication of the accuracy of the price they’ve supplied. These multiple data points are then aggregated by Pyth’s protocol to form a single price feed for each asset, which is updated every 400 milliseconds. By using its “pull oracle” design, Pyth minimizes blockchain congestion and reduces costs by only updating data when a user requests it, rather than continuously pushing it.
To maintain data integrity, Pyth employs a weighted aggregation method, which filters out any extreme outliers and weighs more reliable sources more heavily. This method significantly reduces the risk of tampering or data manipulation. The result is a secure and accurate system where asset prices are cross-verified among multiple independent sources, ensuring that DeFi applications can rely on them for precision and stability.
Did you know? The first blockchain oracle, Reality Keys, was developed in response to smart contracts’ inherent limitations. Blockchains are self-contained and highly secure, but they can’t directly access external information like market prices, weather conditions or event outcomes — data that’s essential for many real-world applications.
Key use cases of Pyth Network
Pyth Network’s real-time data feeds enhance DeFi applications, including DEXs, lending platforms, stablecoins, derivatives and yield optimization.
By supplying accurate, decentralized pricing, Pyth supports responsive trading, efficient liquidations, stablecoin value pegs, risk-managed derivatives and optimized yields, ensuring stability and transparency across DeFi ecosystems. Let’s take a closer look at some of its applications:
- Decentralized exchanges (DEXs): Pyth’s real-time data feeds power decentralized exchanges, enabling accurate price updates for assets traded across multiple chains. With DEXs like Drift Protocol on Solana, Pyth’s low-latency data helps maintain efficient price discovery and risk management. Drift, for instance, leverages Pyth’s rapid updates for features like perpetual futures and other derivatives, allowing traders to respond effectively to volatile market conditions while keeping transactions transparent and secure.
- Lending platforms: For DeFi lending protocols, reliable asset pricing is crucial for accurate loan-to-value (LTV) ratios and automatic liquidations. By feeding real-time data into lending platforms, Pyth supports collateral valuations and liquidation events that protect lenders’ interests and maintain platform stability. Protocols like ReactorFusion on ZKsync use Pyth’s pricing to handle loan values efficiently, while Solend on Solana taps into Pyth to monitor collateral risks and trigger automatic liquidations, minimizing losses in fluctuating markets.
- Stablecoins: Stablecoin platforms rely heavily on Pyth to peg their value to assets like the United States dollar, euro or other currencies and commodities. By integrating with Pyth, stablecoins such as Tether’s USDt (USDT) can maintain their value through frequent, accurate price feeds, which is vital for stablecoin reserves and protecting users from depegging risks. This stable connection to fiat or crypto-collateralized assets keeps DeFi transactions smooth and trusted, especially during market swings.
- Derivatives and structured products: In the derivatives market, Pyth enables platforms to create complex financial instruments like perpetual swaps, options and structured product vaults. Kwenta and other Synthetix projects, for example, use Pyth’s feeds to offer exposure to digital assets and real-world markets, keeping positions well-hedged and reducing risks of liquidation mismatches. Pyth’s high-frequency data also supports unique options like leveraged positions, further advancing DeFi trading options with decentralized price integrity.
- Yield optimization and other DeFi applications: Yield farming and liquidity protocols use Pyth’s price feeds to optimize rewards and manage risks associated with staking or providing liquidity. Yield farmers benefit from real-time data that tracks asset performance, helping them maximize returns. Additionally, applications across blockchain ecosystems such as Mantle’s Lendle integrate Pyth to support dynamic yield-bearing assets and liquidity pools, fostering innovation and user engagement across DeFi.
Did you know? The largest project using Pyth Network is Synthetix on the Optimism blockchain, which relies heavily on Pyth’s low-latency price feeds for its Synthetix Perpetuals (Perps) v2. This integration has enabled Synthetix to create 40 new perpetual markets, process nearly $15 billion in trading volume, and generate substantial staking fees for its users.
Timeline: The history of Pyth network
Throughout these years, Pyth Network has stayed committed to its mission of decentralizing financial data, continuously enhancing its infrastructure, and supporting DeFi’s evolution with precise, high-frequency market data feeds.
2021: Launch on Solana and first price feeds
In April 2021, Pyth Network was announced, with initial development backed by Jump Crypto. Pyth was launched on Solana’s high-performance blockchain in August, offering high-speed, low-latency price feeds for over 30 crypto assets.
By the end of the year, Pyth had secured data from around 40 major financial providers, including exchanges and market makers, supporting its goal of delivering reliable, real-time data for DeFi applications.
2022: Expansion with Pythnet and cross-chain capabilities
Pyth Network expanded significantly in 2022 by launching Pythnet, its own proof-of-authority blockchain forked from Solana. Pythnet allows faster data aggregation and more frequent updates.
In August of the same year, Pyth integrated with the Wormhole bridge to reach other blockchains, enabling it to support price feeds across Ethereum, BNB Smart Chain and more. This year marked Pyth’s cross-chain expansion, aiming to offer its high-frequency data to a broader DeFi ecosystem.
2023: Governance launch and PYTH token airdrop
Pyth introduced its PYTH governance token in November 2023. To encourage community involvement, Pyth conducted an airdrop, distributing PYTH tokens to early users and active DeFi participants, which granted holders voting power over protocol changes and developments.
This launch was a significant step toward decentralizing Pyth’s governance, allowing the community to participate in decisions about fee structures, network updates and ecosystem growth.
2024: Multichain and institutional growth
Pyth continued its multichain growth, expanding partnerships and price feed integrations with a variety of DeFi platforms, such as Drift Protocol and ReactorFusion.
By mid-2024, Pyth reported securing more than $5 billion in total value and claimed nearly 10% of the oracle space, underscoring its growing role as a trusted source of real-time data for DeFi across various blockchain networks.
Pyth Network vs. Chainlink: What’s the difference?
The choice between Pyth and Chainlink depends on project needs: Pyth for DeFi-focused, high-speed, finance-driven data, and Chainlink for broader use cases needing data diversity and robust ecosystem support.
On the topic of oracles, you’re probably aware of Chainlink, the most widely used decentralized oracle available today. With over 1,600 projects supported, why is Pyth needed at all?
Primarily, Pyth Network and Chainlink differ significantly in their data sources. Pyth sources its data directly from financial institutions, exchanges and trading firms, ensuring high-quality, first-party information from organizations like Jane Street and Binance. This first-party approach contrasts with Chainlink, which typically gathers data through independent node operators who often source their data from aggregators like CoinMarketCap and BraveNewCoin.
This reliance on relayers means Chainlink’s data sources are more diversified but potentially less consistent than Pyth’s directly sourced data, especially for high-frequency financial data. There are a few other key differences; let’s take a closer look at each one.
Cost efficiency and data update models
Pyth is structured around an efficient pull-based model that allows users to request data updates only when needed, significantly cutting down on transaction costs. As such, updates on Pyth are nearly instantaneous, at 300–400 milliseconds, tailored for latency-sensitive DeFi applications.
Chainlink, in contrast, typically uses a push model with regular price updates tied to specific conditions like price fluctuations or time intervals, which can be costly and slower. For example, Chainlink updates data every few seconds or minutes based on preset conditions, making it a good fit for applications where speed isn’t as critical but reliability is.
Target audience and use cases
Pyth focuses on the DeFi space and financial data applications, such as decentralized exchanges, lending and derivatives platforms. Its data feeds are optimized for real-time financial transactions where precise, high-frequency data is essential.
Chainlink, however, supports a broader range of use cases, including non-financial sectors like insurance, gaming and supply chain, which require varied external data types.
Transparency and governance
Both oracles have governance mechanisms, but Pyth’s approach leans more into the Web3 ethos.
Governed by a decentralized autonomous organization (DAO), Pyth engages community input directly in decision-making on protocol changes and updates, ensuring transparency.
Chainlink has also integrated community participation, but concerns about centralization persist due to its multisignature contract system, which gives a select few significant control over data feeds.
Pyth’s full onchain transparency further reinforces user trust in its data’s authenticity, whereas Chainlink’s data remains offchain, requiring users to verify its origins separately.
The future of Pyth
Pyth Network’s roadmap highlights significant expansion into crosschain compatibility, with support for over 50 blockchains like Near and Arbitrum, to increase its reach across DeFi.
By enabling seamless, permissionless data feeds across chains, Pyth enhances interoperability for DeFi applications.
Future plans include broadening asset coverage beyond crypto to include commodities, equities and forex, setting it up as a versatile oracle for both digital and traditional finance.
Technical improvements are also underway to reduce latency by 20% and increase the number of data providers per feed, strengthening data reliability for high-frequency trading and derivatives platforms.
Lastly, Pyth’s community-driven DAO model will allow stakeholders to guide its strategic direction on issues like fees and data integrity.
These initiatives position Pyth as a foundational oracle for secure, real-time data solutions across DeFi and Web3 as the sector matures.
