Merlin Protocol
  • Merlin Protocol
    • Intro
    • 0. Abstract - Features Implemented at the Choice of the DAO
    • 1. Decentralization and DeFi
      • 1.1 Features implementable at the choice of MerlinDAO
      • 1.2 Computer system
      • 1.3 Onchain Vs Offchain
      • 1.4 Risk Management
    • 2. The Merlin token, the MerlinDAO and future scenarios
      • 2.1 Merlin token (MRN)
      • 2.2 Merlin DAO
      • 2.3 Scenario of possible monetization of the MerlinProtocol
        • 2.3.1 Liquidity in the Liquidity Pool, Token Buyback and Burning
        • 2.3.2 The types of commissions that end up in the Liquidity Pools
      • 2.4 Staking
      • 2.5 Tokenomics
    • 3. Funds
      • 3.1 Top Cap
      • 3.2 Middle Cap
      • 3.3 Thematic Baskets
      • 3.4 Basket managed directly by MerlinDAO
      • 3.5 Index managed by AI
    • 4. How to use WebAPP to create and invest in TokenXFund decentralized funds
      • 4.1 Aladin fund creator user
        • 4.1.1 Use Case UCF1
      • 4.2 User investor of a fund
        • 4.2.1 Use Case UIF1
        • 4.2.2 Example: UIF1 use case
        • 4.2.3 UIF2 use case
        • 4.2.4 Example: UIF2 use case
    • 5. The creation and management of managed funds
      • 5.1 Active management
      • 5.2 Performance and benchmark
      • 5.3 Performance fees
      • 5.4 Ranking of Managed Funds
    • 6. Tokens to invest in
      • 6.1 The selection criteria for big and mid cap tokens
      • 6.2 Selection criteria for small and micro caps and ranking of tokens to put in portfolios
      • 6.3 Portfolio Composition Limits
    • 7. Oracles
      • 7.1 Decentralized Oracles
      • 7.2 Oracle design pattern
      • 7.3 ChainLink oracles —> (ChainLink Docs)
      • 7.4 Decentralized Data Model
      • 7.5 Data Security
      • 7.6 Uniswap v3 Pricing Oracles —> (Uniswap V3 whitepaper)
      • 7.7 Random Number Generator Oracles
    • 8. Swapping for fund rebalancing
      • 8.1 What is a Swap and why to Swap
      • 8.2 How to Swap
      • 8.3 When to Swap
      • 8.4 Javascript SDK for Uniswap v3
      • 8.5 DEX Expansion
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  1. Merlin Protocol
  2. 7. Oracles

7.7 Random Number Generator Oracles

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Last updated 2 years ago

The MerlinProtocol platform will make use of ChainLink's random number generation system, called VRF, Verifiable Random Function.

The need for random numbers is motivated in the context of TokenXFund by the need to ensure different and variable random time windows that allow the platform to find the updated exchange prices in unpredictable timeframes, the fund to update its assets held and its users to make operations of entry or exit from the fund.

The generation of random numbers involves in VRF a precise chain of steps illustrated below:

To summarize:

a) The Smart Contract consumer of random numbers submits a request for a random number, along with a "seed" on which to base the random generation.

b) The request is received by a VRF Smart Contract, which requests a network of oracles to generate the random number based on the consumer's seed.

c) The oracles use their own "secret key" and the consumer's "seed" to generate offchain a random number, responding to the Consumer Smart Contract with the generated number and publishing on-chain a cryptographic proof, verifiable with the public key of the generating oracle and the consumer's seed.

It is noteworthy that ChainLink also offers guarantees on the data provider oracles, who, being remunerated with fees for their service, have an economic incentive to keep the random generation safe and fast and would lose this incentive in case the cryptographic counter-evidence disproves the genuineness of their work.

The random number generated will be used by MerlinProtocol Smart Contracts to determine unpredictable time intervals in which to make their fund trades, without allowing external price manipulation in close proximity to them.