Frequently Asked Questions

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.  Tokens are mined with every successful Tellor data point and the company takes a 10% dev share to support the development of the ecosystem. 

Why did you build Tellor?

We originally set out to build Tellor because our previous startup, Daxia (a derivatives protocol on Ethereum) needed an oracle.  Daxia created tokens that would represent the short or long side of crypto pricing pairs, BTC/USD for example. We relied on a centralized oracle to provide the price data points to settle the contracts.  We knew this didn’t fit with our ambitions to be a fully decentralized protocol and so we set out to find a decentralized oracle that would fit our needs. That solution didn’t exist. So we set out to build it ourselves.

What is an oracle?

An oracle provides real-world off-chain data and submits this information to a blockchain to be used by smart contracts.  Typically this is a data feed provided by a third party service.

What is "The Oracle Problem?"

Since smart contracts on Ethereum are fully self-contained and any information or access to off-chain data is restricted, certain types of smart contracts are reliant on an outside provider (an oracle) of off-chain data points.  The problem is that you now have a decentralized smart contract with a centralized key point of failure. The issue with this is obvious to anyone who values decentralization. 

How does Tellor solve this problem?

Tellor set out to solve the oracle problem in a specific context:  a lack of secure and decentralized price feeds for DeFi applications.  Tellor aims to enable the growth of the DeFi industry by providing a secure source of for high quality pricing data.  The Tellor Oracle is an on-chain data bank where miners compete to add the data points. To create a properly incentivized system Tellor mints a native token, “Tributes.” Parties pay Tellor Tributes to submit a request for data to the Oracle.  Based upon the reward assigned to each request, the Oracle selects the best funded query every ten minutes to create a challenge for miners to solve. Each query collects specific data (e.g. ETH/USD or BTC/USD prices) and makes it available on-chain. Proof-of-work has proven to be the gold standard for crypto economic consensus mechanisms and Tellor utilizes it within a hybrid model to secure the oracle. In addition to the security provided by the PoW process, we have added an additional layer of security through the deposit of Tributes which miners are required to stake before they are allowed to mine and risk losing their stake if their submitted values are successfully challenged.

How do you differ from the competition?

Our competitors are aiming to allow any smart contract to query almost any piece of off-chain data.  We’ve narrowed our aim at allowing for our smart contract to query price data every ten minutes.  It’s a subtle difference, but it allows us to make some stronger assumptions about security and will hopefully allow us to launch and be truly decentralized a bit faster than them.  To summarize, we focus more on putting higher value pieces on chain with more measurable security qualities. How we plan to do it is by utilizing proof-of-work and staked miners to get off-chain information onto Ethereum.

What is the purpose of your token, Tellor Tributes?

  • Provide Security

Besides their obvious use to incentivize miners through base rewards, Tellor Tributes are used for miners’ staking deposit as well as for the system’s dispute fee. Additionally, ownership of the Tellor token is utilized as aggregation unit for calculating votes in disputes.

  • Create a robust and active Tellor ecosystem and community

The security of the Tellor system is directly related to how decentralized the system is. A diverse and distributed ownership of Tellor tokens, miners, and users implies a system that is not beholden to the interest of a small set of parties.

  • Establish a sustainable system for years to come

Tellor’s demand may grow faster in the short term than in several years. It’s plausible to imagine a scenario where the Tellor system comes to a point where demand is no longer growing. Having a system that does not have a shortage or surplus of tokens given each stage is desirable.

How many tokens need to be staked by miners?

Miners must stake 1000 Tributes in order to participate.

What if a miner submits a bad data value?

It is important to have a mechanism to challenge data values submitted by bad actors should there be any on our network.  Any Tribute token holder can initiate a challenge by paying a fee in tokens. The challenged submission then goes into a 7 day voting period where all Tribute holders vote on the validity of the data. 

Why do you use staked PoW as your security protocol?

PoW is still the most tried and true way of securely decentralizing a network.  The additional staking elements were necessary to add additional and necessary security measures to properly disincentivize gaming the system.

How high will be the Supply Growth Rate be?

We will use a Constant Issuance method.  Tellor mints a fixed amount each block and the token supply grows at a fixed number each year, thus creating a gradually decreasing money supply growth rate.

What is a dev-share?

A dev-share is a structure in which a portion of the block rewards goes to the treasury of the founding team in order to finance the team’s efforts. In Tellor’s case the dev-share is 10%, meaning that 10% of all mining rewards will not go to miners but to the Tellor team instead. This is not only a long-term structure to support the project, but also aligns incentives between miners and the Tellor team, like maintaining a decent token price for profitable mining and a secure network.  A dev-share allows us to get the necessary financing we need to create a sustained and secure oracle network, but only if we really deliver a great product that’s needed. Unlike an ICO where we could raise millions and never launch or deliver on our promises, our belief in the success of the project strengthens our confidence to choose the harder route. A dev-share is not only a commitment to our project, but also to our community!

What is your token's address?

Can Tellor work on other chains?

Yes.  The Tellor system can work on most other chains with smart contract functionality.

Who are your current investors?

We successfully raised funds from MakerDao and Binance Labs (Binance’s venture arm).

Who are the founders?

Brenda Loya – CEO

Nicholas Fett – CTO

Michael Zemrose – CSO