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News19 September, 20263 min read

Oracle provider Switchboard shuts down, blames AI and shrinking budgets weeks after breach

Switchboard is shutting down just weeks after an oracle compromise cost two DeFi protocols hundreds of thousands of dollars.

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Switchboard, a permissionless oracle network that provides blockchain applications with price and other external data, is shutting down just weeks after a flaw in its IOTA oracle deployment let an attacker replace the signing keys of all 14 production oracles, while a separate Switchboard-linked exploit drained Full Sail on Sui, the firm said in a Friday post on X.

  • The shutdown comes weeks after a security incident involving its oracle infrastructure affected at least two DeFi protocols.
  • Virtue, an IOTA-based stablecoin protocol, reported about $455,000 in losses after an attacker gained control of the signing keys for Switchboard's IOTA oracle queue and manipulated the reported price of IOTA.
  • Full Sail, a Sui lending protocol, was hit separately after an attacker added a malicious signing key to a Switchboard oracle. About $91,000 was drained from three vaults, and Full Sail later shut down.

Switchboard said it has exhausted "all possible alternatives" and that recent exploits were among the factors behind the decision. It didn't disclose whether the security incident directly triggered the shutdown.

A five-year oracle business

Founded in 2021, Switchboard built infrastructure that lets developers bring off-chain data onto blockchains and create customized feeds. Its documentation says the network secured billions of dollars in on-chain activity across more than 10 blockchains.

  • The company raised at least $11 million in publicly reported funding, including a $3.5 million seed round in 2021 and a $7.5 million Series A in 2024 led by Tribe Capital and RockawayX.
  • Investors and backers included Solana Foundation, Aptos Labs, Mysten Labs, StarkWare and Lemniscap.

Switchboard said the economics of the oracle business have since changed.

"AI has made it easier than ever to create their own oracles and reduced pricing power. The bear market has slowed down new chain launches and dramatically shrunk budgets."

Switchboard

It also pointed to Hyperliquid's deal with S&P as evidence that major protocols may increasingly license data directly instead of relying on independent oracle networks. The company is telling developers to migrate immediately to alternatives, including Pyth and Redstone.

Its remaining contributors will provide migration support until Sept. 25.

  • The Coinformer reached out to Switchboard and will update the story once the firm responds.
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