Entropy as a new entrant for on-chain randomness

The Pyth Network is a decentralized oracle network designed to provide high-fidelity, real-time financial market data to blockchain applications. It connects data owners, such as exchanges and market makers, directly to decentralized applications (dApps) across multiple blockchains, ensuring the delivery of accurate and timely data.

Pyth sources data from over 90 first-party publishers, including exchanges and trading firms, ensuring a diverse and accurate data pool. The network aggregates data from various providers into a single price feed with a confidence interval, enhancing the reliability and transparency of the data.

Pyth offers ultra-low-latency data updates, which are crucial for time-sensitive financial operations like high-frequency trading. It also supports over 40 blockchains, leveraging Solana’s high throughput and low latency to ensure efficient data distribution.

Entropy as Pyth’s on-chain random number generator

Pyth Entropy is an innovative on-chain random number generator developed by the Pyth Network to provide a secure and reliable source of randomness for blockchain applications.

Entropy addresses the need for trustless, decentralized, and cost-effective random number generation on blockchains, which is crucial for various use cases such as gaming, NFT minting, lotteries, and prediction markets.

Pyth Entropy employs a two-party commit-reveal protocol, a well-established cryptographic technique, to generate random numbers without requiring trust between the parties involved. This protocol allows one party to commit to multiple random numbers upfront, reducing the number of transactions required.

Additionally, Entropy incorporates the blockchain’s block hash to introduce an extra layer of randomness. Entropy has been integrated with several blockchain networks, including Arbitrum, Blast, Chiliz Chain, Fantom, LightLink, and Optimism, enabling developers across these ecosystems to access a secure and responsive source of on-chain randomness.

Weekly Pyth Entropy users by chain

The importance of randomness in DeFi and Web3 applications can be seen in several key areas:

1. Smart contracts: Random number generation is essential for many smart contract functionalities, such as selecting winners in lotteries or distributing rewards fairly among participants.
2. Fair games: Blockchain-based games and gambling platforms rely on verifiable randomness to ensure that outcomes are truly unpredictable and not manipulated by any party.
3. NFT minting and distribution: Random selection processes are often used to determine the order or recipients of limited edition NFT drops, ensuring equal opportunities for participants.
4. Decentralized governance: A random selection of validators or committee members can enhance the security and decentralization of blockchain networks.
5. Cryptographic operations: Many cryptographic protocols used in blockchain systems require secure sources of randomness to generate keys and signatures.

The need for secure random number generation in blockchain

Blockchains, the technology behind cryptocurrencies and many other decentralized applications, rely heavily on cryptography for security. But there’s a hidden vulnerability lurking within these seemingly secure systems — the generation of random numbers.

Unlike the chaotic world around us, computers are deterministic machines. Given the same input, they always produce the same output. This predictability presents a challenge for blockchain applications that require true randomness.

The main challenges of generating random numbers on blockchains are:

1. Deterministic nature: Blockchains are deterministic systems, where each transaction generates a specific output state given its inputs. This deterministic nature makes it challenging to generate true randomness on-chain, as randomness is defined by the absence of predictability.
2. Transparency: Blockchains are transparent by design, with all transactions and state changes publicly visible. This transparency means that any random number generation process can be observed and potentially manipulated by participants.
3. Predictability: Since blockchain transactions are preordained, participants can predict the outcome of random number generation processes by observing the state of the blockchain and the inputs to the process. This can lead to exploitation and unfair outcomes.
4. Lack of entropy: Blockchains lack natural sources of entropy, which are necessary for generating truly random numbers. Factors like block timestamps and hashes can be influenced by miners, making them unsuitable as sources of randomness.
5. Consensus challenges: Generating random numbers on a decentralized blockchain requires a consensus mechanism to ensure that all participants agree on the random output. This can be challenging to achieve without introducing vulnerabilities or centralization.
6. Delay and cost: Generating random numbers on-chain often requires multiple transactions and a delay before the random number is revealed, which can be problematic for time-sensitive applications. Additionally, the cost of these transactions can be prohibitive.

To address these challenges, various techniques have been developed, such as commit-reveal protocols, verifiable random functions (VRFs), and the use of off-chain oracles. These approaches aim to provide secure, decentralized, and cost-effective random number generation for blockchain-based applications.

Use cases requiring secure randomness

1. Gaming and GameFi

Gaming and GameFi (Decentralized Finance + Gaming) are key use cases that require secure and verifiable randomness. Randomness is an important element in many games, used to create fun and immersive player experiences.

In gaming, randomness is deployed by developers to either create the conditions on which a player will act (input randomness) or to manipulate the outcome of a player’s actions (output randomness).

For example, in a game of chance like poker, the random shuffling of the deck is an example of input randomness, while the dealing of cards to players is an example of output randomness. In the context of blockchain gaming and GameFi, secure randomness is essential to ensure fairness and prevent manipulation.

2. NFT minting and distribution

NFT minting and distribution is a key use case that requires secure and verifiable randomness. By randomly generating unique combinations of traits for each NFT, projects can create scarcity and ensure that no two NFTs are exactly alike. This makes certain NFTs more valuable and desirable.

For NFT drops with a limited supply, randomness is used to fairly select the recipients from the pool of eligible participants. This prevents manipulation and ensures equal opportunity for everyone.

By generating secure randomness in the NFT minting process, projects can create fair, unpredictable, and exciting NFT experiences that attract and retain users. Randomness helps prevent manipulation, ensures scarcity, and adds an element of surprise and excitement to the NFT minting process.

These are just a few examples, and the potential applications for secure randomness continue to grow as technology advances. As the need for trust and security increases across various industries, reliable and verifiable random number generation becomes an essential tool.

How Pyth Entropy works

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Pyth Entropy uses a two-party commit-reveal protocol to generate secure and verifiable random numbers on the blockchain:

Commitment phase

Two parties independently generate a secret random number. They hash their random numbers and commit the hashes to the blockchain. This commits them to their chosen random numbers without revealing them.

Reveal phase

The two parties reveal their original random numbers. Each party verifies the validity of the other’s commitment by re-hashing the revealed number and checking if it matches the previously committed hash. The final secure random number is then obtained by hashing the two revealed numbers together.

Illustration of commit-reveal scheme

Pyth Entropy enhances this basic commit-reveal protocol in two key ways:

• Pyth Entropy allows one party to commit to multiple random numbers upfront, reducing the number of transactions required to operate the protocol.
• Pyth Entropy mixes the blockchain’s block hash into the final random number, adding an extra layer of randomness.

These enhancements make Pyth Entropy more efficient and secure compared to other random number generation approaches, while still providing strong security guarantees and continuous responsiveness.

Technical implementation

Pyth Entropy has been integrated with several blockchain networks, including Arbitrum, Blast, Chiliz Chain, Fantom, LightLink, and Optimism. This allows developers across these ecosystems to access a secure and responsive source of on-chain randomness.

The integration process for developers involves the following steps:

1. Developers integrate the Pyth Entropy smart contract into their application’s code, which provides the necessary functions to generate random numbers.
2. When a random number is needed, the application calls the Entropy contract’s commit function, which allows one party to commit multiple random numbers upfront in a single transaction.
3. The counterparty then calls the reveal function at the appropriate time, revealing their random numbers and completing the commit-reveal protocol.
4. The final random number is obtained by hashing the two revealed numbers together, along with the blockchain’s block hash for an extra layer of randomness.

Pyth Entropy provides strong security guarantees through its use of a two-party commit-reveal protocol. The commitment phase ensures that the random numbers are committed before being revealed, preventing manipulation.

The incorporation of the blockchain’s block hash makes it impossible for either party to predict the final random output. The hashing of the two revealed numbers together creates a verifiable random output that neither party can influence on their own.

Additionally, Pyth Entropy’s use of bulk commitments reduces the number of transactions required, improving efficiency and cost-effectiveness for developers and users.

Pyth Entropy benefits

Pyth Entropy offers a multitude of benefits for developers building secure and innovative DeFi and Web3 applications.

Speed and responsiveness

Pyth Entropy follows a “pull” design, where the two parties communicate directly over HTTP instead of the blockchain itself. This enhances the speed and simplicity of the random number generation process compared to other on-chain random number generator solutions.

Cost-effectiveness

The efficiency of Pyth Entropy’s design helps reduce the number of transactions and overall gas costs required to generate random numbers on-chain.

Reliability and uptime

Pyth Entropy is built on a robust commit-reveal protocol, minimizing trust between participants and ensuring truly random and verifiable results. This provides developers and users with a reliable and highly available source of randomness for their applications.

Decentralization

Pyth Entropy’s two-party commit-reveal protocol distributes trust and reduces the risk of a single point of failure, enhancing the decentralization of the random number generation process.

Scalability across multiple blockchains

Pyth Entropy has been integrated with several blockchain networks. This allows developers across these ecosystems to access Pyth’s secure and responsive random number generation solution, enabling scalability and interoperability.

Case studies

Several projects have already integrated Pyth Entropy to power their decentralized applications:

1. FLAP (Blast)

Flap

FLAP is a bundle market for blue chip NFT mints that use Pyth Entropy to ensure fair and unpredictable outcomes for users.

2. Fungible Flip (Blast)

Fungible Flip

Fungible Flip is a coin flip game built on Entropy that offers true 50/50 odds with no house rake.

3. SlashToken (Chiliz Chain)

slashtoken

SlashToken is a platform designed to provide user-friendly NFT and token tooling for Web3 projects, leveraging Pyth Entropy’s secure randomness.

In addition to these existing integrations, Pyth Entropy has the potential to be adopted by a wide range of future projects.

Estfor Kingdom is a blockchain-based game that could benefit from Entropy’s secure random number generation to create fair and exciting gameplay experiences for players.

The ease of integration and permissionless access to Entropy makes it an attractive option for projects looking to incorporate verifiable randomness into their platforms.

How could Pyth’s Entropy grow Web3?

At present, Pyth Entropy has earned around approximately 5.28 ETH in revenue and has effectively handled 264,429 requests with a success rate of 97.62%.

Dashboard

Pyth Entropy represents a major advancement in the blockchain ecosystem by providing a secure, reliable, and efficient solution for generating random numbers on-chain. Its innovative approach based on a two-party commit-reveal protocol addresses the key challenges of generating true randomness on deterministic blockchains.

Entropy’s launch on multiple blockchain networks demonstrates its growing adoption and the demand for secure on-chain randomness across various ecosystems. By integrating Entropy, developers can now build a wide range of decentralized applications that require unpredictable outcomes, such as gaming, NFTs, lotteries, and prediction markets.

The potential long-term impact of Pyth Entropy on DeFi and Web3 innovation is great. By enabling fair, secure, and responsive random number generation, Entropy empowers developers to create more engaging, trustworthy, and compliant applications. This, in turn, can lead to increased user adoption and the development of new use cases that leverage the power of verifiable randomness.

Moreover, Entropy’s ease of integration and permissionless access make it an attractive option for projects looking to incorporate secure randomness into their platforms. As the Pyth Network continues to enhance Entropy’s capabilities, such as exploring hybrid approaches, streamlining coordination, improving latency, and expanding blockchain support, its impact on the DeFi and Web3 space is likely to grow even further.

To further understand Pyth’s Entropy technical aspects, explore its comprehensive documentation. The Entropy docs provide detailed explanations of their network architecture.

The Pyth network discord server is a vibrant hub for the community. Connect with developers, enthusiasts, and the Pyth team directly

References

• Random number generation for blockchain apps https://pyth.network/blog/pyth-entropy-random-number-generation-for-blockchain-apps
• Pyth Entropy launches on mainnet https://mpost.io/pyth-networks-on-chain-random-number-generator-pyth-entropy-launches-on-mainnet/
• What is pyth network https://tatum.io/blog/what-is-pyth-network
• On chain randomness https://www.researchgate.net/publication/381352758_Entropy_as_a_New_Entrant_for_On-chain_Randomness
• Build random number generator https://blog.logrocket.com/build-random-number-generator-blockchain/