Tellor is restoring full decentralization in the Blockchain Oracle industry. It implements a trustless ecosystem of incentivized data providers that are organized with a Proof of Work anti-Sybil mechanism and slashing protocol. Thus, anyone can be a data provider without the need for whitelisting.
Bitcoin, the first fruit of Blockchain technology was built on a core value. This value led to its success as we know it today. Though its trade-off was speed for security, its success story today is hedged on the fact that to a great extent, its core value holds. ‘What is this core value?’ you say… It is decentralization. Bitcoin is leaderless; a single random entity cannot control it; it cannot be minted arbitrarily. Bitcoin is the father of blockchain technology. And blockchain technology is decentralized.
The Ancient Landmark
Sadly many other ‘innovations’ that came after it seemingly following its footsteps have forgotten the ancient landmark. In the quest for speed or scalability, they have traded off security through decentralization. Only very few blockchain-based projects are decentralized. Innovations come and go, but the trump card for blockchains has always been and will always be decentralization. One of the biggest enablers for blockchain smart contracts and new asset classes in recent times have been oracles. Blockchain oracles connect smart contracts to off-chain data sources so they can function as intended.
Blockchain Oracles and Smart Contracts
Source
Blockchain oracles give smart contracts access via data APIs to real-world data that are not readily available on-chain. Smart contracts transparently connect two agreeing entities without the need for intermediaries. Sometimes, these binding agreements are based on the value of an asset that is not on the blockchain. Smart contracts cannot access off-chain information for so it was created. Oracles bridge the gap. They enable smart contracts to connect to previously inaccessible data sources. With Oracles, a bet between two parties on the future price of an asset can be determined transparently and directly by the smart contract linking them.
Blockchain Oracles' subtle Weakness and Trade-off
There are mainstream oracles today each with a peculiar attribute. Each differentiates on how data sources are handled and how data providers are identified and incentivized. There are those with single data providers. They are centralized so users may face a very high risk of data manipulation or system gaming. There are those with distributed multi-sig data providers where only whitelisted parties are allowed to provide data. Who whitelists? A question that points to centralization and lack of transparency. There is the incentivized version of the distributed multi-sig providers, though better, the question is still the same- who whitelists providers?
The challenge has always been transparency in the aspect of how data providers are chosen and whitelisting processes. Whitelisting processes and systems and data providers play a very important role in providing accurate data. There must be a level of trust.
But looking at this challenge from another perspective; isn’t this why decentralization and the trustlessness of blockchain exist?
Tellor- Re-establishing Blockchain's core Value
Tellor is restoring full decentralization in the Blockchain Oracle industry. It implements a trustless ecosystem of incentivized data providers that are organized with a Proof of Work anti-Sybil mechanism and slashing protocol. Thus, anyone can be a data provider without the need for whitelisting. Data providers stake an amount of TRB to provide data. The staked amount is to hold providers responsible for the accuracy of the data they present to the network.
After its launch, Tellor developers have relinquished the project's control and keys. The admin keys have been sent to “0 address” thus, the project's rolling ball in the hands of the community for decentralized governance.
How Does Tellor Do it?
Tellor Price Feed
Data providers stake an amount of 500TRB (Tributes) to become part of the network. They provide price data for data requests. Providers do complex calculations to be chosen to provide price data feeds. Price feeds are updated every five minutes. Therefore there can be only 288 requests per day. Tips are sent by requesters to prioritize the price feed of a particular pair over others. The five most funded requests are considered for each block.
Tellor Blocks and Selection
Tellor Dispute Center
To provide a price feed for each five minutes-block, five data providers who solve complex calculations first are chosen. These providers present price feeds. The median of these five feeds is chosen to be the price for the block. In a situation where a malicious provider wants to game the process by providing incorrect data, the median will nullify the effect. An aggregate or average of the price feeds, in this case, will not represent the data adequately.
Data Sources
Data providers are provided with a wide range of price feed APIs from different reliable sources they can choose from. They are at liberty to use any API they wish or even to enter feeds manually.
Tellor Rewards for Miners
Data providers or miners are incentivized in TRB when they provide feeds for each block. Half of the tips for requests for each block are paid to miners while the rest is burnt. Thus, Tellor operates a deflationary model. To make rewards fair to all miners, a miner cannot win successive blocks. There is a 15 minutes wait or cool-down time after a miner is chosen for a block.
Dispute
Tellor Dispute Center
Price feeds can be disputed by any member or holder of TRB. A disputer must stake TRB when they dispute. In a dispute, a two-day voting period is allowed for TRB holders to make a decision. A disputer loses his staked amount if voted against by the community and the stake is transferred to the miner whose feed is disputed. In a situation where the disputer is correct, the miner's stake is lost and the amount is paid to the disputer. Thus each miner is responsible for the price feed they present.
Use Cases
Tellor best use cases are found in:
- Crypto Derivatives
- Crypto Lending
- Crypto Price Prediction and Betting
For now, Tellor might not be useful for decentralized exchanges that handle huge numbers of requests per second. But, for its decentralization in governance, anything is possible.
Blockchains
Tellor is built to be a price oracle for Ethereum but has been found useful for other networks. Tellor deployed an optimistic oracle on Matic in response to Community demand.
I believe Tellor will work perfectly well with any network with smart contract standards similar to that of Ethereum.
Personal Opinion
I believe Tellor is in the grand order of Bitcoin in terms of decentralization. The fact that it is implementing a decentralized governance style is plausible. With this almost anything is possible. I feel the need for a change in the consensus model and anti-Sybil mechanism going forward. Tellor needs a PoS mechanism and a consensus model like Avalanche for scalability while not sacrificing security and decentralization. A solution like this on a Defi swap exchange will be huge.
Many thanks to Spuddyminer (a Tellor Community member) who answered many of my questions and concerns.
Get in Touch with Tellor
Website | Twitter | Discord | Telegram | Medium | GitHub
Posted from my blog with Exxp : https://cryptostocksreviews.org/tellor-oracles-bringing-full-decentralization-to-crypto-oracle-systems-in-a-grand-style/news/