An oracle is a mechanism enabling the network to receive information about the outside world. Generally, oracles are technically challenging, because they have to choose trusted information sources, guarantee its integrity and properly process it to determine whether the contract conditions are met. But with respect to prediction markets oracles are relatively simple: the data is easily represented as a mathematical formula. In Amoveo, an oracle renders three outcomes: “True”, “False” and “Bad Question”.
There are two types of oracles inside the network: governance and question. Governance oracles are used to make decisions about network development. For instance, a question about changing miner awards. Governance oracles are relatively expensive, currently it costs 0.3 VEO to launch one. Question oracles are used to determine bet winners. Its launch currently cost 0.02 VEO. The questions may sound like “Did a democrat win the elections?” or “Did Bitcoin’s price rise above $7,000?” and so on.
The important distinction of Amoveo is that oracles also work for a fee, but not necessarily from those betting, anyone can launch an oracle. When it’s time to determine who won the bet, all network users receive the question at hand. Those willing to participate in the oracle’s work have to answer the question and back it up with money. The answer that gets the most amount in bets is determined as true. Those who bet on the opposite outcome lose. According to gaming theory, in such situations it doesn’t pay to cheat, because the true answer is widely known or easy to verify. The undecided will prefer not risk their money. But if the question is of scandalous nature or concerns common myths, those incorrectly answering False may have the majority. To correct the situation, those confident that the majority is wrong can double their bets. This measure cannot not guarantee that an oracle is absolutely error-free, but in prediction markets players are unlikely to bet large amounts on answers that are difficult to check using an oracle.