Pyth Network: The Spotify of the Crypto World

In the late 1990s, a revolution took place in the music industry: it brought free music to everyone.

Napster overturned the entire music industry by creating a platform where audiences could freely share digital music files without worrying about intellectual property rights. Suddenly, anyone could download any song from any album for free.

However, this peer-to-peer (P2P) model of music file sharing was not sustainable forever. Eventually, Napster was replaced by Spotify, which transformed the music industry, benefiting both music consumers and intellectual property owners.

Today, the Web3 world is experiencing a similar transformation, led by Pyth Network. In this article, we will delve into why Pyth Network is becoming the “Spotify of cryptocurrency and DeFi.”

The Dawn of Digital Music

In the early days of the internet, the concept of digital music was a very cutting-edge and exciting new idea. When you bought a CD, it was commonly believed that you could freely do whatever you liked with the digital files you purchased. Under these circumstances, anyone who bought a CD and shared it online essentially became a “Napster node,” providing free music for everyone!

However, this unrestricted freedom gradually became a significant challenge. Intellectual property owners, mainly artists, were not receiving their due compensation. If artists couldn’t profit from their creations due to the operation of these “Napster nodes,” why would they continue to create music? The consequences were predictable: Napster faced a series of lawsuits and even spam attacks from record companies trying to “protect their world.” Ultimately, Napster was Enter the era of Spotify. Unlike record stores and Napster users acting as intermediaries in music transmission, Spotify introduced a streaming media service that allowed users to access almost all songs by paying a nominal fee. This model not only significantly reduced distribution costs but also led to a surge in music production. The primary difference between these two outcomes lies in Spotify’s recognition and reward of intellectual property owners.

Parallel Events in the Crypto World

In the cryptocurrency industry, there are scenarios akin to Napster’s approach to the music industry. Traditional oracles believe that all internet data is freely accessible. Their primary role is to incentivize nodes to bring this data onto the blockchain. However, there’s a fundamental issue with this method: not all data is free.

Take financial market data as an example. In 2023, the value of this data exceeded $6 billion. Traditional financial markets often require costly subscriptions to access feeds for stocks, forex, and commodities.

The cryptocurrency market is unique, as order book data from CEXs is typically free and easily accessible. However, this situation won’t last forever.

For instance, Coinbase started charging for market data last year. Looking back, traditional exchanges only began charging for such data about 15 years ago when they realized it was a profitable revenue source. Now, it constitutes a significant portion of their income, as this data is customized and packaged to meet client needs. The same trend is inevitable with cryptocurrency data.

However, traditional oracles are still ‘freely’ scraping financial market data from the internet. This raises concerns: the data is either illegally obtained or outdated, leading to delays in updates.

In both scenarios, considering the economic value of market data, the sustainability of such a business model is questionable.

Pyth Network: Lessons from Spotify

This is where Pyth Network comes into play, adopting a strategy similar to that of Spotify. Pyth Network has introduced a model of direct data flow, bypassing intermediary networks for financial data acquisition.

Pyth’s network design eliminates unnecessary middlemen, ensuring that the actual content creators—the data publishers—are fairly compensated. This approach not only guarantees the quality of data but also offers traders—the creators and owners of these unique, valuable financial data—a new opportunity to participate in the data distribution economy.

Our data publishers share a common vision with the broader Pyth Network community and the wider DeFi ecosystem: to address the challenges of oracles in a comprehensive and scalable manner for the advancement of Web3 and DeFi.

These data publishers recognize that the oracle solutions before Pyth Network were incomplete and unlikely to scale to support a wider range of assets.

Additionally, the Pyth oracle solution allows these data publishers—exchanges and market participants of digital and traditional assets—to explore Web3 applications at their own pace and direction.

Since its inception, Pyth Network has been continuously growing, with an average of three new data publishers joining the network each month. To date, Pyth has over 85 data publishers, including some of the industry’s most renowned participants: Binance, Bybit, Wintermute, Cboe Global Markets, Optiver, and LMAX. These are just a small part of the ecosystem. On the other end of the network, over 200 applications are integrating Pyth’s feed data to secure the value and transaction volume of billions of dollars in smart contracts.

History doesn’t repeat itself, but it often rhymes. The music industry’s shift from Napster to Spotify provides a framework for addressing the current challenges in the cryptocurrency and DeFi spaces.

With its innovative firsthand data model, Pyth Network has made significant strides in changing the way high-throughput DeFi protocols obtain and utilize financial data. For data creators and application users, this is the melody they hear.

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