Introduction

With the rapid development of blockchain technology, decentralized finance (DeFi) has become the forefront of reforming the traditional financial system. At the core of DeFi is the ability to conduct financial transactions without intermediaries, but this innovation is based on a crucial element: reliable and accurate data. In this context, decentralized oracles have emerged as a bridge connecting real-world data with blockchain networks. Tellor (TRB), as a significant participant in this field, is more than just another blockchain project. It represents a unique solution to existing problems and is committed to providing undeniable value to the DeFi ecosystem.

Core Technology

In smart contracts, oracles play the role of external data sources, enabling smart contracts to access essential ecosystem data. While the importance of oracles cannot be overstated, there are several issues with oracle mechanisms. The biggest problem lies in the vulnerability of oracles to attacks, which can pose security risks to entire contracts as attackers can disrupt the entire contract by uploading incorrect data to the oracle, resulting in significant security risks.

Tellor addresses these problems through innovative mechanism design. Its mechanism encompasses three crucial steps: data request, data submission, and token incentives. In the data request phase, smart contracts request data and send it to the oracle. Anyone can become a data provider in the system by paying gas fees to submit data to the Oracle and verify its correctness during the validation process. In the data submission phase, the data is placed in a pending data pool, and miners verify and submit the data through a proof-of-work-based consensus mechanism. This process is essential as inaccurate data sources can have a severe impact on the entire contract if not thoroughly validated. In the token incentive phase, randomly selected validators verify the submitted data, record the correct data on-chain, and publish it to the smart contract. To encourage the timely and accurate submission and verification of data, Tellor leverages the TRB token incentive mechanism, allowing everyone to benefit from participating in the Oracle process.

Compared to traditional oracles, Tellor’s advantage lies in its more flexible data request approach. Reporters can make data requests based on token holdings. For example, a reporter can initiate a request based on token holdings to query market fluctuations of a particular digital asset and receive a result that enforces data correctness. This decentralized data request method helps eliminate risks posed by human manipulation and fraudulent behavior.

The Tellor protocol also has a significant advantage in supporting more complex applications, such as data aggregation and sorting between multiple datasets. This expands the project’s application scope in the blockchain field, making it more versatile and greatly extending its potential use cases.

Supporter and Core Team Members

Tellor was one of the projects incubated by Binance in 2019, receiving $500,000 in funding from them. There is no publicly available information on additional funding, but the founding team has relevant experience in the field.

• Michael Zemrose - Co-founder: Previously worked as a business coach at companies like Real Elevation and served as CSO at Daxia, a smart contract company.
• Brenda Loya - CEO / Co-founder: Worked in statistical and research-related roles for over 10 years at various U.S. government agencies, including the U.S. Department of Labor. Previously held positions as VP and Chief Developer at Daxia, a smart contract company.
• Nicholas Fett - CTO: Previously held research positions in economics at the U.S. Commodity Futures Trading Commission and the U.S. Department of Labor. Founded the smart contract company Daxia.

According to Linkedin data, as of the time of writing, the team consists of 13 members responsible for business development, engineering, marketing, and other business areas.

TRB Tokenomics

As of the date this article was drafted, TRB has a market value of $270 million with a total supply of 2.55 million tokens and a circulating supply of 2.49 million tokens. Its uniqueness lies in its decentralized oracle infrastructure that incentivizes participants and eliminates the risk of data manipulation by third-party institutions, thus protecting digital asset owners from fraud and making blockchain technology more robust and transparent.

TRB adopts a hybrid distribution model of Proof of Stake (POS) and Proof of Work (POW), where the total supply is not a fixed number but is linked to rewards for data submissions. The core function of TRB is to bridge the gap between on-chain and off-chain data, providing real-world data to smart contracts and helping protocols make more informed decisions. Its main competitor in the market is LINK.

Recently, the price of TRB has been rising steadily, reaching new all-time highs. From the bottom to the drafting date, it has increased by over 12 times, reaching $110. This has fueled the excitement in the entire oracle market and attracted a large number of investors. At the same time, some investors remain cautious about the potential risks and future performance of TRB.

Behind the upward trend of TRB, there are some whale wallets driving the market value. Currently, the top 10 holding addresses control nearly 25% of the total supply. Since most of these addresses are anonymous, it is currently unclear whether they belong to exchanges or the project team’s wallets. However, the impact of these whales is evident as the price continues to rise, attracting more attention from investors.

However, the market value of TRB may be overestimated and not in line with its ecological development. If a whale suddenly emerges and liquidates TRB, the market may not have enough funds to buy it, leading to a sharp decline in the price of TRB and affecting the healthy development of the project. Currently, Tellor has just completed the V2 upgrade, so the token economics has not yet been released in a clear version.

Competitive Analysis

To better understand the competitiveness of Tellor, we need to compare it with popular projects in the field such as Chainlink and Band Protocol.

Tellor (TRB)

• Tellor emphasizes security by increasing the cost of attacking the network. Each block requires 1,000 TRB tokens to be cracked, which is considered a significant deterrent.
• Decentralization is a focus for Tellor, allowing anyone with 1,000 TRB tokens to set up a node and provide data to the oracle, fostering competition among miners to supply the needed data.
• TRB tokens are used for paying to retrieve specific data, as rewards to miners, for participating in the competitive mining process, and for resolving data validity disputes.

Chain Link (LINK)

• Chainlink aims to provide tamper-proof data inputs and outputs for smart contracts on any blockchain. It allows smart contracts to connect to various data sources and APIs and send data to parties operating outside the blockchain.
• LINK tokens are used to pay for all services provided by the Chainlink network, focusing on data aggregation and response services to enhance smart contract functionality.
• Chainlink has gained more trust in the DeFi sector but operates fewer nodes and requires a substantial amount of LINK tokens to participate, which could be a barrier to entry.

Band Protocol（BAND）

• Band Protocol is described as a cross-chain data oracle platform that connects real-world data and APIs to smart contracts, aiming to enable dApps to access various types of data.
• Band Protocol has migrated its infrastructure from Ethereum to Cosmos, achieving greater scalability and reducing transaction costs and wait times. This is particularly beneficial for dApps that require real-time data.

The choice between these oracle services depends on the specific needs of a project, including the required blockchain functionality, speed of data retrieval, and cost implications. Chainlink, based on Ethereum, is well-suited for projects that can tolerate slower data retrieval times and higher transaction costs, given Ethereum’s scalability issues. On the other hand, Band Protocol, benefiting from Cosmos’s scalability, can achieve faster transactions and lower costs, which may be more suitable for projects that require real-time data.

To sum up, while Band Protocol has advantages in efficiency and cost due to using Cosmos, Chainlink has strengths in security and data stability. The choice between these oracle networks will ultimately depend on the specific requirements of the dApp and the type of blockchain project they are using. Tellor, with its strong focus on security and decentralization, may be an option for projects that value these aspects and are willing to participate in its unique mining and dispute-resolution process. Each network has its place in the market, meeting different needs in DeFi, NFT, and the broader blockchain ecosystem.

Conclusion

Overall, as a blockchain oracle project, TRB’s future development is closely tied to DeFi protocols. While TRB has experienced significant growth, its market value still has ample room for expansion compared to its competitors, LINK and BAND. As more projects begin utilizing oracle services, the demand for TRB is expected to increase. However, it is important to acknowledge that risks and rewards go hand in hand, and investors should carefully evaluate the risks and market performance.