Smart contracts on Ethereum are fully self contained and any access to off-chain data is restricted. By creating a system where inputs to a data feed are secured by a network of staked miners, Tellor Defi Coin creates trustless access to off-chain information. This paper highlights the structure of this system and gives an in-depth overview regarding the incentives and assumptions used to ensure an honest input of data to the oracle.
The Tellor founding team, Nicholas Fett, Brenda Loya, and Michael Zemrose, began the journey of Tellor in early 2018. But, Tellor is much more than the team, and much more than just an oracle. It’s a permissionless community of data providers, validators, and token holders that crypto-economically secure the process of putting real world data on-chain. Only together do WE make Tellor what it is.
Tellor is an oracle 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. The inputs to this data-bank are secured by a network of staked miners. Tellor utilizes crypto-economic incentive mechanisms, rewarding honest data submissions by miners and punishing bad actors, through the issuance of Tellor’s token, Tributes (TRB) and a dispute mechanism.
The Tellor Oracle provides a trustless and decentralized alternative for off-chain data. It provides the infrastructure for decentralized applications to query off-chain data by properly incentivizing miners to provide data.
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. Tokens are mined with every successful Tellor data point and the company takes a 10% dev share to support the development of the ecosystem.
How it works.
Data gets queried.
Users can request specific data queries to be updated in the next block by adding a TRB tip.
Queries become PoW.
Tellor’s smart contract manages the requests and issues the highest tipped queries for the data providers to mine along with a PoW challenge.
Data providers turn PoW into data updates.
The network of staked data providers compete to mine the PoW challenge and submit the new data updates that were requested.
Official data values as a readable on-chain price feed.
Out of the first 5 data providers to solve PoW and submit new data, the median value is determined by the Tellor contract as the official value and placed on-chain in a readable data feed.
Submissions can be disputed.
Tellor Defi Coin data submissions are subject to being disputed by token holders. The data provider’s stake is slashed if he’s successfully disputed.
Data submission is done through a competitive process where miners respond to PoW challenges and the winners get to submit data to Tellor’s on-chain data feed. PoW provides an excellent source of sybil resistant randomness to Tellor’s smart contracts as well as provides an ideal system for token distribution.
Tellor is an easy, implementable solution through which DeFi dapps can receive high value data for smart contracts. Their data feeds are stable and reliable because they make use of staked miners who compete through Proof-of-Work to submit official value for requested DeFi data.
Stable and Reliable
Their data feeds are stable and reliable because they make use of staked miners who compete through Proof-of-Work to submit official value for requested DeFi data.
Security is achieved through Tellor Defi Coin architecture (mining algorithm and selection process for median value) and incentives implemented for miners to promptly submit the correct values. Using the median value instead of the average (or simply just one) protects the value from being manipulated by a single malicious party submitting an extreme value. Ultimate security however is provided by the staking/dispute mechanism.
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