TELLOR

    [DRAFT] Tellor, the decentralized oracle built on Ethereum

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    11 May 2020. Written by Malcolm Cannon

    Tellor is tackling the problem of siloed blockchain networks that rely on centralized data sources. Typically, if a smart contract requires off-chain data — for example, the final score in a sports game, or the price of Bitcoin vs the US Dollar — the oracle will often have to rely on a trusted third-party source for that information.

    This decentralized oracle project is backed by Binance Labs, Maker, and Consensys Grants.

    This article will introduce you to the project and give some insights into what problems the developers are trying to solve with their blockchain.

    Find the Tellor (TRB) Mining Guide on f2pool.com.

    What is Tellor?

    Tellor is a decentralized Oracle for bringing high-value off-chain data onto Ethereum. The system utilizes a network of staked miners that compete to solve a PoW challenge to submit the official value for requested data.

    Michael Zemrose, Tellor co-founder and CSO

    Tellor is tackling the problem of siloed blockchain networks that rely on centralized data sources. Typically, if a smart contract requires off-chain data — for example, the final score in a sports game, or the price of Bitcoin vs the US Dollar — the oracle will often have to rely on a trusted third-party source for that information.

    However, Tellor removes the reliance on centralized parties. Miners on the network compete to provide accurate data to the Tellor Oracle and are rewarded with TRB for their efforts. Users are then able to read from the on-chain database in order to inform their trustless applications.

    Data collection for the Tellor system is decentralized as the mining, and therefore the data submission is open to everyone who stakes. By taking the median value instead of the mean (or worse just one answer) the Oracle is protected from the value being manipulated by a single rogue party.

    Smart contracts on Ethereum are fully self-contained, and any information or access to off-chain data is restricted. Tellor solves this problem by creating a system where parties can request the value of an off-chain data point (e.g. BTC/USD) and miners compete to add this value to an on-chain data bank, accessible by all Ethereum smart contracts.

    Tellor Whitepaper

    The Tellor Oracle

    The Oracle is an on-chain data bank where miners compete to add accurate data points. For incentive system, Tellor mints their native token “Tributes”, (TRB) and these are used both to pay for data requests of the Oracle and to reward the miners who supply the data.

    Mining rewards for accurate data

    Every ten minutes the Oracle selects the highest funded query and creates a challenge for the miners to solve. The query then collects the specified data (e.g. BTC/USD price) and makes it available on-chain. Five submissions from miners are needed to create an official data point, and the first five miners to solve the PoW puzzle, and submit a data point are rewarded with TRB.

    In addition to the security that PoW natively provides, Tellor miners are required to stake TRB tokens to participate. They risk losing this stake if their data is successfully challenged.

    Automated Fact-Checking

    For Tellor, as a system, to work properly, then parties must actively monitor the network and submit disputes for incorrect values. If this were a manual process then participation would be extremely burdensome. Therefore, there is a Tellor disputer which automates fact-checking. The way that it works is that your data server will store historical values (e.g. the last 10 minutes) and then compare any submitted values to the min/max of the historical values. If the value submitted is outside a certain threshold (e.g. 10% of the min/max), then the party will be notified and they can choose if they wish to dispute the bad value.

    tellor.readthedocs.io

    Tellor Founders

    The founding team of Tellor is Brenda Loya CEO, Nicholas Fett CTO, Michael Zemrose CSO.

    The Tellor founders previously created a startup called Daxia that offered decentralized derivatives. The product needed weekly crypto price updates from an oracle. At the time, they had to use a centralized service for this because there were no options in the market that fit their needs in a sufficiently decentralized manner.

    So they set out to build a decentralized oracle that prioritized censorship resistance and decentralization over speed. From there they pivoted to Tellor.

    CTO and co-founder Nicholas Fett talks to Brad Laurie about Tellor

    How is Tellor Development Funded?

    Tellor didn’t launch with an ICO and there wasn’t a pre-mine. This means that all tokens have been created by miners who were actively contributing to the network. In order to fund the project, the Tellor development team receives 10% of the baseline mining reward. They use this maintenance fee to:

    Encourage community participation and dispute voting To develop and then distribute mining software for the network Promote adoption of the Tellor oracle Build developer tools to make it easy to deploy Tellor Fund research and improvements of the oracle itself

    In April 2020, the team launch tellor.fund. It’s a platform that allows TRB holders to propose and crowdfund activities that support the growth and adoption of Tellor.

    Tellor’s success is partially dependent on the acceleration of DeFi into new markets. This should lead to an increased demand for decentralized oracles. We recently explored the place for traditional financial services players in relation to Bitcoin Mining, and projects like Tellor sit somewhere between the two worlds. If the adoption patterns remain on the same trajectory there may well be a big role for Tellor to play in the decentralized financial future that bitcoin and some blockchain projects promise.

    Written by Malcolm Cannon

    Malcolm Cannon

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