Flare Network: The Oracle
On January 13, 2023, holders of the Flare Network token (FLR) had the opportunity to delegate tokens to the FTSO’s network of data providers for the first time.
FTSO stands for Flare Time Series Oracle. The FTSO uses data gathered by a network of independent data providers to generate price estimates. Data providers on the network use computing power and algorithms to collect and provide price estimates to the FTSO. Token holders delegate tokens to the data provider of their choice, which gives the data provider vote power. Data providers are rewarded for accurate data estimates and distribute those rewards to delegators. A percentage of the rewards earned go to the provider based on a pre-disclosed fee.
Songbird Network, Flare Network’s “Canary Network,” launched in September 2021 and serves as a real value testing network and lower house of governance for Flare Network. Songbird is designed to deploy and test new network features and upgrades prior to Flare. Songbird Network also utilizes the FTSO system, which went live shortly after the network launched. On Songbird Network, the data providers have typically set their fee between 12–20%. The percentage is set by each provider and may change over time.
The FTSO is designed to be secure and decentralized. To prevent a small handful of data providers from controlling all of the data on the network, multiple protocols have been implemented to prevent collusion and single entity control.
What Is Vote Power?
Each data provider on the Flare Network is able to acquire up to 2.5% of the vote power and 2.5% of the rewards pool. Delegators are able to delegate to a data provider holding more than 2.5% of the vote power, but the delegations beyond 2.5% do not increase the vote power or the amount of rewards received.
Example:
Provider A has 1% of token delegation.
Provider B has 2.5% of token delegation.
Provider C has 5% of token delegation.
In this scenario, Provider A will receive a weighted consideration of 1% of the voting power. Theoretically, if 100 votes were cast, Provider A would cast 1 vote. Provider B and Provider C will both receive a weighted consideration of 2.5% of the voting power, or 2.5 votes each if 100 votes were cast.
Data providers are rewarded in network tokens (SGB or FLR) for providing useful data close to the estimate price. Delegators to Provider A and B will receive rewards acquired by their respective data provider minus the agreed fee. Because Provider C surpassed the 2.5% vote power, only 2.5% of their influence will be considered and rewarded. In this scenario, if Provider B and Provider C delivered the same data, they would both receive the same amount of rewards, as the rewards are capped at 2.5%. Since Provider C has twice as many tokens delegated to them, Provider C’s delegators would receive 1/2 of the rewards per token delegated, in comparison to provider B.
As the network evolves and future protocols go live, everything on the network will be modifiable through network voting. The FTSO vote power cap is one network feature that may be voted on in the future. The first vote on the Songbird Network was a vote to lower max voting power to 2.5% from the original 10%. This was done to prevent collusion and further decentralize the network.
Delegating Tokens
I currently delegate tokens on Songbird Network and Flare Network using the Bifrost Wallet. I find Bifrost to be simple and intuitive, though this is not an endorsement. There are many wallets and delegation methods to choose from. Flare Network has deployed the Flare Portal which allows users to wrap and delegate their tokens. The Flare Portal is also where network participants go to participate in network voting. You will need a supported web3 wallet to utilize this site’s features.
In order to delegate to a data provider, FLR token holders must wrap their FLR tokens to create WFLR. Once FLR has been wrapped, token holders can use the delegation tool to delegate WFLR to the data provider of their choice. Currently, most applications allow users to split their delegations between a max of two providers. Delegations can be done through Bifrost Wallet as well as through the Flare Portal. WSGB and WFLR are not “locked” when delegating, meaning token holders maintain custody of their tokens and can move their tokens at any time. Instead, the delegations are recorded by a random snapshot of the network which occurs at a random time during the previous epoch.
Note: There are fees to utilize the network. Currently, the entire process described above costs less than .05 FLR, or less than $.01.
What Is An Epoch?
An epoch is a measurement of time, and the length of an epoch varies per network. Currently, epochs on Songbird Network last one week, while Flare Network has 2 epochs per week. Once per epoch, a snapshot of the current state of the network is taken and the tokens delegated by each wallet are recorded. The data captured in the snapshot is used to weight vote power for the following epoch.
This feature allows users to delegate, unwrap or move their tokens at any time, as the vote power is based on the state of the network during the previous epoch. Knowing that each epoch is based on data collected from the previous epoch, delegators wishing to participate should wrap and delegate their tokens in advance. Delegators waiting until the start of an epoch to delegate will likely miss out on participating until the start of the following epoch.
Selecting A Data Provider
Ultimately, delegators should delegate based on what they feel is best for them and the network based on their knowledge at the time. As the network grows, more statistics and data will become available making researching data providers simpler. Additionally, data providers may implement ways of incentivizing token holders to delegate to them. For those who have never delegated their tokens on Songbird or Flare, familiarizing yourself with wrapping, delegating and claiming rewards is the best place to start.
It is my hope that this explanation simplifies some aspects of the Flare Network, specifically the Flare Time Series Oracle and token delegation. While the vocabulary and inner workings of the network may be confusing and complex, participating is simple.
For additional information on Flare and the Flare Time Series Oracle visit the Flare Network Website.
Disclaimer: BLK MOON’s insights, strategies and priorities may not be best for any individual or enterprise. BLK MOON takes an exploratory, evolutionary and artistic approach to investment and finance management. All content created and distributed by BLK MOON should be viewed as entertainment, information and experimentation and should never be taken as financial advice. BLK MOON is not and does not employ financial advisors.
