“Tellor is a decentralized oracle protocol that incentivizes an open, permissionless network of data reporting and data validation, ensuring that data can be provided by anyone and checked by everyone.” –Tellor.io
We live in a multichain world and every year, more and more blockchains are added to the growing list.
These blockchains will need oracles in order to communicate with each other, and their smart contracts will need data provided to them.
If we are to uphold the 'True DeFi' ethos, then we need to clearly define what decentralized blockchain oracles are in theory and practice.
The Tellor Oracle service achieves decentralization by making sure that anybody can participate (permissionless) and that anybody can check the validity of the data provided. Tellor assumes that the only way to get people to act in an economically rational way is if:
In practice, this looks like:
The Tellor protocol is a much more complicated system than its more centralized oracle counterparts. This is the tradeoff involved with prioritizing true decentralization. The Tellor Machine is made up of 3 different parts:
The major difference between Tellor and Chainlink lies in the ability or inability for anybody to become a reporter. In Chainlink, the central team is responsible for whitelisting different data providers. In other words, not everybody can become a data provider.
Additionally, if the Chainlink team decides to eliminate you from being a reporter, there is nothing you can do about it. Tellor differs from Chainlink in that anybody with enough TRB tokens and a computer can be a reporter.
The Tellor Token (TRB) is a ERC-20 utility token within the Tellor protocol. TRB has several different functions which assist in the health of the protocol:
There are roughly 2.4 million TRB in circulation. The supply of TRB inflates due to the base rewards paid to data providers and also a developer share.
One of the key features of Tellor is that anybody can become a data provider, and no special hardware or mining computers are necessary. The actionable steps to become a reporter is as follows:
You can learn more about How To Become a Tellor Data Provider here
Determining how much money you can make as a Tellor Data Provider is a complicated and variable equation which depends on:
All in all, there is an estimated ~$50,000 a month in tips available for data providers. So learn how to be a reporter and start competing today!
Liquid Loans has many different functions which require price feeds for PLS and USDL from a decentralized oracle:
So who gets to decide what the prices of PLS and USDL are?
Ideally, it would be a distributed network of nodes who are incentivized to input the correct information. And any information that is incorrect is amended and the provider is penalized.
This is necessary because there is plenty of financial incentive for bad actors.
Say an entity owns a large quantity of USDL and they are staked in the Stability Pool.
If this entity has the ability to enter the price of PLS at $0, all of the vaults will liquidate. As a results, the stability providers will end up with all of the PLS in the protocol at a hefty premium.
Therefore, ensuring that this is never possible is critical to the health and longevity of Liquid Loans.
Tellor is a hand-in-glove fit with the true decentralization ideals that many individuals and projects in the Pulsechain community subscribe to. These ideals include censorship resistance, no permissions, immutability, community participation, no admin keys, low-barrier to entry, etc.
Oracle are extremely important to DeFi and support many different products and services that we need on PulseChain:
Disclaimer: Please note that nothing on this website constitutes financial advice. Whilst every effort has been made to ensure that the information provided on this website is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we strongly recommend you consult a qualified professional who should take into account your specific investment objectives, financial situation and individual needs.
Connor is a US-based digital marketer and writer. He has a diverse military and academic background, but developed a passion over the years for blockchain and DeFi because of their potential to provide censorship resistance and financial freedom. Connor is dedicated to educating and inspiring others in the space, and is an active member and investor in the Ethereum, Hex, and PulseChain communities.