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Data is becoming an increasingly valuable commodity, which makes securing data more important than ever. Despite how often digital interaction occurs, data that exists off-chain can't be accessed by blockchain-based applications. Without access to this valuable off-chain data, it can be a challenge to use blockchains in real-world situations. While there is an innovative method to connect blockchains to real-world data via oracles, these systems are often criticized due to their risk of reliance on third parties.
To solve the issue, Tellor and its TRB token have been designed to provide Ethereum with connections to external data. On that note, if you’d like to invest your money in a project that could push the crypto industry forward, this guide explains everything you need to know about the Tellor system before you make that investment.
Key Takeaways:
An interoperable multi-chain oracle network, Tellor connects Ethereum and other EVM chains to off-chain data.
Tellor works on a dispute mechanism and governance framework that contribute to the system's security.
The native token of Tellor, Tellor Tribute (TRB), is used to secure the network.
Tellor is an interoperable multi-chain oracle network that can connect Ethereum smart contracts to external data. The blockchain-based network is a secure, decentralized system that runs on major chains like Ethereum, Polygon, Arbitrum and Optimism, and is compatible with any EVM chain, as well as the Algorand blockchain.
The Tellor system was launched in 2019 by Michael Zemrose and Brenda Loya. Based in the U.S., the project was designed to resolve the issues oracles usually face, namely low speeds and high costs for off-chain data feeds.
The platform is designed to provide Ethereum smart contracts with useful off-chain data. Every data feed that the project uses is stable and reliable. Before the Tellor oracle network was developed, crypto users were tasked with entering a standard cryptocurrency exchange to look up live data about the crypto market, as well as information about current market metrics. Exchanges are equipped with application programming interfaces (APIs) that provide users with the opportunity to keep track of up-to-date data feeds.
Tellor enables users to access the data in a single location via an oracle feed, or Ethereum-based smart contracts. The oracle feed sources reliable, real-time information that users can draw upon without navigating to an exchange.
Ethereum-based smart contracts typically don't have access to any off-chain data. Often, only the info in the contract is accessible. The Tellor network resolves this issue by making it easy for smart contracts to be connected to each on-chain data bank. These connections are directly backed by staked miners, referred to as Reporters within the Tellor network, with the upgrade of its system from proof of work (PoW) to proof of stake (PoS).
Hosted directly on Ethereum, Tellor is a type of oracle network that's able to provide Ethereum-based smart contracts with off-chain data. The platform exists as a medium situated between Ethereum and the off-chain data point that the Tellor oracle accesses. Once connections between the two are made, users are provided with trustless feeds. By using the oracle as a bridge that supports the connection, third parties are no longer needed, which allows for increased decentralization.
Previously, the network ran on a hybrid PoW and PoS algorithm, with staked miners who provide Ethereum with secure and trustless data. Miners work together to solve mathematical equations and other problems. Once the problems are solved, off-chain information is confirmed and validated.
With the revamp to a full PoS mechanism, Tellor released a new white paper in which the miners are now referred to as Reporters. Instead of competing to answer queries on-chain, a single Reporter performs the recording and reporting of data.
By validating information before sending it to Ethereum, Tellor prevents the manipulation of data pulled from off-chain sources. Since Reporters must provide staked tokens to participate, they’re appropriately incentivized to deliver accurate data. If inaccurate info is submitted, Reporters can lose their tokens.
Also known as Tellor Tribute (TRB), the Tellor token is based on Ethereum and supports the platform’s incentivization program. TRB is staked directly by Reporters, and Tellor rewards the Reporters with "tips," which are paid when queries are accurately answered.
The platform is outfitted with a range of features that include everything from security to a governance system.
Tellor’s security is administered via architecture that employs a bond/dispute mechanism to ensure the accuracy of offered data. The overall security of this network largely depends upon the dispute mechanism and the Reporters, who are responsible for responding to off-chain data requests. These Reporters have to bond or stake TRB before providing data, and risk losing their stake should the dispute mechanism deem their data to be a false report.
As previously mentioned, Tellor uses a unique dispute mechanism that allows users to challenge a data value immediately after data is positioned on-chain. If data remains on-chain for a lengthy period of time without being disputed, it's likely to remain secure. Tellor can safely assume that unchallenged data is secure since users are incentivized to dispute invalid values.
Anyone can dispute a data submission once a value is positioned on-chain. However, the challenger needs to pay a small dispute fee. Once the fee is paid and the challenge has been properly submitted, the account of the Reporter who originally submitted the data will be locked until a vote takes place. Over the course of two days, the Tellor governance mechanism allows voting to occur on the validity of the data. If the user is unable to wait for the final vote result, they can request the data again.
If the data is correct, the Reporter’s account is unlocked, and they receive the fee that the challenger paid. In the event the data is incorrect, the challenger receives a reward. If the data is determined to be invalid, both the Reporter and challenger get to keep their tokens, minimizing the risk of penalizing two innocent parties.
Tellor’s governance system is centered on settling disputes or challenges. This system is also used when new features or upgrades to the Tellor platform need a vote. For instance, a change to the monetary policy can occur only once a vote has taken place. Voting power is balanced primarily among TRB holders, users, Reporters and the Tellor team.
While each group of stakeholders’ voting weight is equal, users and Reporters can adjust their voting power based on their level of activity in the system.
The number of tips affects users’ level of influence. Reporters can increase their voting power with each valid data submission. Meanwhile, TRB holders’ influence is determined by the amount of TRB they hold on the chain in which the vote is occurring. The team's multisig wallet acts as a tiebreaker and helps to safeguard the integrity of the system in its developmental stage. However, it will eventually be replaced as the system matures and there are sufficient users, Reporters and TRB holders working to establish checks and balances.
One crucial aspect of Tellor's governance system is that Tellor can be deployed across numerous chains. While TRB is an ERC-20 token situated on the Ethereum network, users can launch the Tellor platform on practically any chain, and the governance and dispute resolution has to change to accommodate the chain in question. Governance for Tellor on a different chain is dictated by the stakeholders on that specific chain, and the inflationary time-based rewards are exclusive to Ethereum.
A Reporter stakes or bonds a minimum of 100 TRB (or $1,500 in TRB, whichever is greater in USD value) on the Ethereum chain. The minimum staking amount varies, depending upon the chain used. After staking, the Reporter can submit data for any query.
Reporters are incentivized to present data to the user with the highest tip, and are rewarded for their data provision with 2% in tips and time-based inflationary rewards. After providing the data, however, the Reporter has to wait for a minimum 12-hour period (which can be configured) before they can submit again.
Should a user require data more frequently than provided for when the time-based rewards exceed the gas costs, they can opt to include additional tips to boost the speed of the oracle.
On Sep 1, 2023, the Tellor team proposed a new upgrade to its system in response to the continuing evolution of crypto and blockchain. This upgrade, termed the Tellor Layer, addresses several challenges, including the absence of a dominant blockchain as a native system, with the blockchains all utilized for various purposes, and the lack of distinction between a Layer 2 blockchain and a Layer 1 with a trustless bridge.
Additionally, as the internet transitions from Web 2.0 to web3, there will be increased demand for blockchain services, accompanied by heightened expectations for enhanced performance, finality and security of blockchain transactions.
Tellor Layer is set to facilitate increased validation of data through a greater number of validators. Its modular governance will also help flexibly customize its governance framework. Users will be able to boost security by adding staking requirements. Furthermore, Tellor Layer will expand its scope of support, encompassing non-EVM chains in addition to EVM chains.
Tellor can be used as an oracle for all kinds of off-chain information. Because of how the platform is structured, it's not perfectly positioned to be used for high-speed values that require immediate accuracy. However, Tellor currently has many use cases. The platform’s team wants to further increase use cases in the months and years to come. Tellor’s use cases include:
Bridging various assets
L2 security via sequencer validation and data availability
Prediction markets
Price feeds
Tellor Tribute (TRB), Tellor’s native token, drives the entire network, as it’s used to fund the contract that offers payment to the data Reporters. The Reporters also have to stake TRB as bond or collateral, which serves as a deterrent to malicious behavior that could harm the network. The Tellor token is the primary aspect of network security. When the token price is high, the cost of directly attacking the network is more expensive.
The price of Tellor Tribute (TRB) has recently seen a sharp rise, shooting from below $10 in August to above $100 by the end of October. It now sits at $105.40, just about 35% lower than its all-time high of $161.12 on May 10, 2021, and over 1,000% higher than its lowest price of $0.01 on Nov 1, 2019.
While price analysts generally anticipate an uptrend for the token’s value, their predictions regarding its price trajectory vary. CoinCodex and PricePrediction share a similarly conservative view, expecting it to be between $200 to $300 by 2030. On the other hand, DigitalCoinPrice presents a far more optimistic projection, foreseeing a peak of $381.59 in 2025, potentially surpassing $1,000 by 2030 and reaching $1,103.32.
Tellor has a considerable amount of value in the crypto industry since it solves the cost and speed issues with oracles. Even though the future of the platform isn't set in stone, DeFi applications are continuing to increase in popularity, which indicates a relatively bright future for Tellor.
Moreover, Tellor is actively preparing to cater to the future development of the crypto space, exemplified by their proposed Tellor Layer protocol, which is poised to enhance their network’s flexibility.
In addition, Tellor is committed to completely decentralizing their data specifications, granting greater flexibility in requests for custom data. To this end, the network has built an on-chain registry that connects the query type name with a document addressed by a hash on the IPFS. The on-chain registry empowers everyone to manage their data specifications efficiently. Additionally, hosting the document as a hash on IPFS minimizes gas consumption, as a majority of the document is stored off-chain.
All of these developments indicate Tellor’s positive potential as an investment. Alongside its recent price increase, Tellor’s price looks set to surge further. Nevertheless, it’s crucial to note that these observations aren’t financial advice. Given crypto’s volatile nature, it’s recommended you always conduct thorough research before making any investment decisions.
If you want to purchase TRB, numerous platforms offer the token, one of which is Bybit. When using Bybit, TRB is available via perpetual contract (TRBUSDT). A Perpetual contract is unique because it doesn't have an end date. These contracts are essentially derivatives that provide you with the opportunity to speculate on a cryptocurrency's future direction.
While standard futures contracts expire each quarter, perpetual contracts never expire. You can use them to bet on a currency's price over a short or long period of time. If you want to purchase TRB perpetual contracts on Bybit, you can start by signing up on Bybit, or logging in to your existing Bybit account. You can find TRB by entering its three letters into the search bar at the top of the Derivatives page.
Tellor effectively solves the oracle problem, and has already proven to be a secure solution for bringing off-chain data to blockchains such as Ethereum. The network’s interoperability expands its scope to multiple chains, enabling more users to participate in decentralized data provision.
As the crypto/DeFi space continues to evolve, projects like Tellor play a pivotal role in ensuring the integrity and reliability of blockchain data. With its robust and secure system, Tellor is well-positioned to continue its journey toward becoming a cornerstone of DeFi and a trusted provider of secure, real-time information to blockchain applications worldwide.
#Bybit #TheCryptoArk