What is the Tellor (TRB), and How Does It Achieve True Decentralization?

Quick Takes

• Tellor is a decentralized blockchain oracle service which provides reliable and accurate data to a variety of smart contracts
• In the Tellor protocol, anybody can easily become a reporter and anybody can dispute inaccurate information
• Liquid Loans uses Tellor for the price feed of PLS to ensure accurate collateral ratios of PLS/USDL vaults
• PulseChain needs oracles, and Tellor will be the first truly decentralized oracle service on PulseChain

What is Tellor Crypto (TRB)?

“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.

How Does Tellor Achieve Decentralization?

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:

• You pay them to write oracle data
• You make them stake Tellor which can be lost if they submit inaccurate information.

In practice, this looks like:

1. When Tellor token is staked, the staker becomes a data provider
2. Data providers race to input data for certain questions in return for a reward from those who need the data (i.e. What is the price of PLS at 12:00 UTC Monday)
3. Any staker can dispute the accuracy of a data point which opens up a 2-day vote among all the stakers to determine validity.
4. If the data point is determined to be erroneous, the provider gets "slashed" aka loses a portion of their staked Tellor
5. If the data point is determined to be correct, the provider receives no penalty.

What is the Tellor Machine?

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:

1. Autopay. This is a system which incentivizes reporters to submit specific data to whomever needs it.
2. Telliot. This is an open-source software which anybody can use to become a data provider.
3. The Data Feed, Etherscan, and the Disputable Values Monitor. These are tools that data providers can use to view, analyze, and dispute data if necessary.

Tellor vs Chainlink

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.

How does the Tellor Token (TRB) work?

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:

1. Staking TRB. When enough TRB is staked, it enables a user to become a data provider. This stake is essential for the integrity of data providing because portions of it can be taken as a penalty for incorrect submission of data.
2. Tipping. TRB token can be put up as a tip from external protocols to incentivize data providers to give them the data that they need.
3. Disputing. Incorrect information can be disputed by anybody within the protocol. If the dispute is successful, 100 TRB are taken from the incorrect data provider and given to the disputer.

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.

How To Start a Node and Become a Tellor Data Provider

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:

• Buy enough Tellor Tokens (TRB) to qualify as a reporter (dependent on blockchain, but anywhere between $100-$2000).
• Stake the TRB within the Tellor Smart Contract
• Run reporting software such as Telliot or a homemade software (if you are savvy enough)

You can learn more about How To Become a Tellor Data Provider here

How Much Money Can Tellor Data Providers Make?

Determining how much money you can make as a Tellor Data Provider is a complicated and variable equation which depends on:

• The price of TRB
• The success of your Data Reporting Software
• The tips amount placed by the smart contracts who want the data
• The amount of protocols within the Tellor system which want data

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!