Why Chronicle, Ethereum’s first oracle, is raising a seed round seven years after launch

Chronicle, the first oracle to launch on Ethereum in 2017, has raised a $12 million seed round. This is a relatively modest amount for a protocol that already secures the largest decentralized stablecoins, Dai and USDS. 

The round, led by Strobe Ventures (formerly BlockTower Capital), will go towards accelerating the development of the Chronicle network as the universe of real-world assets begins to take shape. Galaxy Vision Hill, Brevan Howard Digital, 6th Man Ventures, Robot Ventures, Gnosis Venture, among other firms and angels including Rune Christensen, Andre Cronje and Stani Kulechov, also joined the round.

“We are not in some kind of race to say, hey, we secure 500 protocols, 1,000 protocols, 10,000 protocols. I think we're a little bit more on the other side of the spectrum, where we'd rather kind of secure larger, higher quality, long-term players,” co-founder Niklas Kunkel told The Block in an interview. “The worst case scenario for us is we do an integration for some new team and after two months they become this zombie thing, right?”

To some extent, Chronicle has been in a privileged position to take a slower, more thoughtful approach to scaling having never truly needed funding after being spun out of the MakerDAO ecosystem (now Sky) with a working product. The core protocol was designed by an early group of MakerDAO coders working on a predecessor to DAI called SAI. 

“Back then, there were no oracles. There was no Chainlink. There wasn't anything,” Kunkel said, discussing the key problem oracles solve: getting off-chain data onchain securely. “And so just to make Maker happen, just to build out DAI, we needed to make our own oracle. That actually ended up being the first oracle on Ethereum, period.”

Making it alone

Four years later, after the dissolution of the Maker Foundation, the Chronicle team branched out as a standalone entity to expand its use beyond DAI. The team went on to develop Scribe, a proprietary cryptographic primitive meant to address the high computation costs of routinely updating oracles. 

Chronicle officially launched its "public" product in September 2023.

What sets Chronicle apart from other oracles is a hyper-focus on verifiability. The system is designed to be maximally transparent by having each validator — the entities that pull pricing information from multiple locations like Binance and Uniswap — report all of their raw data and the process of computation.

“It really embodies that DeFi ethos of don't trust, verify,” Kunkel said. “It changes oracles from being this black box that just spits out a number that has to be blindly trusted to being just as transparent as the blockchains that we all run on.”

Big integrations

Chronicle has processed over $20 billion in total value since inception, and has since been integrated into top RWA platforms, including buzzy credit platforms like Centrifuge, Midas and Superstate, as well as stablecoin infrastructure M^0. It is also used by top-tier DeFi protocols Euler and Morpho. Though most of its current TVL still comes from the rebranded Sky ecosystem.

Now, the project is looking to expand deeper into the world of traditional finance as institutions like BlackRock, Fidelity and Hamilton Lane expand deeper and deeper into the trenches. “A major theme of the past 24 months has been tokenized assets — this is not some kind of fad,” Kunkel said. “This is happening at scale.”

There is approximately $20 billion in onchain real-world assets, including everything from U.S. Treasurys to private credit and real estate.

However, he argues, many of these onchain products are often not fully trustless — because they’re “not crypto native” — making users as reliant on issuers and custodians to be truthful about their holdings as ever. Over the past year, Chronicle has been working on a solution to “plug into the underlying reserves” of these tokenized assets to gain “privileged, private read access" to provide in real-time what those underlying assets are. 

“That's kind of what's been missing, right? DeFi protocols have been hesitant to onboard RWAs because they don't have this embedded trustlessness and transparency,” perhaps hinting at projects like Sky that have been signaling a strong desire to move deeper into the RWA space. 

“We're actually one of the only oracles that does this. And we've been seeing an enormous amount of growth,” Kunkel said. “We think this is going to be a really huge vertical. It will probably outscale DeFi within the next 12 months.”