7.4 Decentralized Data Model

In the context of Chainlink it is important to understand how the flow of information is generated by decentralized oracles and, through a series of steps, arrives in a rapid and secure way to the agents who have requested it.

The decentralized data model is based on an infrastructure in which we recognize four steps taken by the data.

External to the infrastructure we find the consumer of the data requested from ChainLink, generally a Smart Contract.

It relies on a "feed" generated by a network of oracles, managed and operated by different actors, all interested in keeping the feed timely and accurate in order not to lose the economic incentive paid by the consumer for the service.

In the case of MerlinProtocol, the oracles will collect information from the various APIs exposed by the various financial players in the Crypto world.

For example, the oracles could interface with the APIs exposed by coinmarketcap. A relevant number of these oracles will be used, so as to eliminate single point of failures on the oracle side. This mechanism will also be kept for data aggregators, which will be carefully chosen and diversified in order to always guarantee a minimum number of answers for each query made by Smart Contract, thus keeping the system safe.

The oracles are interfaced with External Adaptors based on special templates proposed by ChainLink that simplify the process of data collection and standardize the communication protocols used.

The data received through the External Adaptors are then transmitted on-chain and special Smart Contract Aggregators perform the necessary computation to determine a final answer to the query of the consumer.

Obviously, tight control algorithms will be implemented to ensure resilience to manipulation of the data aggregation process, averaging the received values and verifying that the gap value between the received inputs guarantees a meaningful and truthful output.

The Proxy Contract receives the requested value from the aggregator, and then exposes it to the consumer Smart Contract.

For MerlinProtocol, the data requested from the aggregator could for example be volumes, prices, number of transactions, number of exchange markets and volatility of a certain token, to determine any changes in the assets held in the funds.

Customizable via ChainLink will be the aggregation parameters "Deviation Treshold" and "Heartbeat Treshold", which allow respectively to specify a maximum deviation ceiling on the values reported by data providers oracles and to establish the temporal cadence of the updates.

It should be noted that the frequency of the PriceFeed readings by the Smart Contract of the funds will be sporadic, as the need to modify the assets of the various funds is limited to a narrow temporal window where the funds are reshaped according to the criteria identified by the creator of the individual fund.