One week from today, we will begin the auction of our compound token (PHI). Based on the incredibly powerful MiniMe token design, which has been extended to enable inexpensive and lightweight transfers with a minimal component, this represents the most sophisticated token implementation on the Ethereum blockchain to date. We’ll be talking more about the benefits and abilities of PHI in future articles and literature, but for now, we’d like to take a moment to explain how the token fits in with the rest of what we’ve been building.
Pythia: The Oracle Machine
To understand how Delphi works (and the value we provide), first one must appreciate the role of the oracle in smart contract contexts, and the power that these oracles necessarily possess. Since a contract’s data provider ultimately determines its execution result, a centralized oracle solution makes for a centralized smart contract. Recognizing this, we can see that the only way to truly preserve the benefits of decentralization is to make sure that the oracle itself is decentralized. Pythia allows us to do exactly that.
The basic structure of Pythia is inspired by standard multisignature wallet contracts, featuring signature weight and weight-threshold extensions to increase the power, flexibility, and usability of the design. This allows users and service providers to easily deploy and manage decentralized oracle solutions, which can then be used to call other contracts and supply data input where it is needed.
Pythia represents a novel and practical approach to the oracle problem, providing a highly versatile model and framework and laying the foundations for our oracle ecosystem. The oracles deployed through Pythia can be used to arbitrate the inputs to other contracts directly, or alternatively to supplement other oracle solutions, decentralizing and strengthening them. They might link directly to the contracts that rely on their data input, or to intermediary contracts which aggregate and broadcast oracle outputs from different source providers. In short, Pythia is the basic underlying engine that allows us to generate and manage distributed oracle contracts.
Omphalos: The Prediction Market Framework
To demonstrate the utility of a decentralized oracle, consider the use case of prediction markets. Such markets have incredible potential, but without a serious oracle solution to supply the final market outcome, this potential is squandered. A large part of our vision at Delphi is to harness this potential and to equip mankind with the tools it needs to truly reap the benefits of this technology. That is why we’ve developed Omphalos, a highly understandable and secure prediction market framework, which is built to be directly compatible with the oracles generated through Pythia.
Unlike other prediction market implementations on Ethereum, Omphalos allows prediction staking and settlement to occur with ETH directly, obviating the need for users to acquire platform-specific tokens for the purpose of predicting (and profiting from their correct predictions). This allows us to tap into the full liquidity of the Ethereum network, massively reducing the barriers to entry and participation. This also means users don’t have to worry about whether their outcome-representative tokens will actually retain any value after market settlement (although such tokens can be used with Omphalos without any problems, if desired). It also allows for a significantly simplified overall contract design, which maximizes the understandability of the model and helps with contract review and analysis. This is an absolutely crucial benefit, because it means that Omphalos contracts will be as secure as possible over the long term. Finally, because we do not rely on a rigid consensus-based design, Delphi’s prediction market architecture can be extended and customized at will, meaning that improvements and optimizations can be quickly incorporated as they become available.
Omphalos will allow users to easily capitalize on their knowledge by sharing it with the world.
PHI: The Signal Generator
Since Omphalos will allow the easy conversion between information and value, and Pythia provides the oracle functionality to make this possible, an incentive exists for these oracles to abuse their privilege and try to game the system for personal profit. Unfortunately, it is impossible to remove this incentive altogether. Fortunately, it is possible to discourage (and weed out) misbehaving oracle services through other means, like reputation systems. That’s where the compound token comes in.
Delphi’s token PHI is designed so that users who are solely interested in the token transfer functionality do not have to be burdened with the complexities of the advanced features available, but such advanced features do exist. They are encapsulated into what we call the signal token component, which uses automatic balance snapshot updates to enable powerful new features like clonable (and reconfigurable) sub-tokens. These features can be leveraged into a full-fledged data platform, which we intend to use to establish a marketplace reputation system.
The PHI tokens can be used to signal satisfaction with a particular oracle without decrementing the signaler’s actual token balance. This provides a Sybil-resistant voting mechanism which inherently includes time series data, which can be very useful for reputation analysis purposes. Beyond this, the signal tokens possess the added benefits of upgradability and future-friendliness. When complementary contracts and interfaces are supplied to make full use of these features, a truly valuable oracle marketplace can emerge. In other words, the PHI token represents the component that will allow users to route around and ignore dishonest oracles, and it is what makes Delphi’s Agora platform possible.
This is just a basic introduction to the modules and systems that underpin Delphi. Over the next few days and weeks, we will be taking a deeper dive into the different individual components and explaining the code involved in more depth. We will also be elaborating further on the current state of the project, our team information, the general vision that motivates us, and the role we ultimately expect to play in crypto’s future. We will continue to push out code updates as we publish these posts, so that you can see Delphi take shape from a literary perspective as well as a programmatic one. We are preparing to release a lot of information, so you may want to subscribe to our mailing list to stay on top of everything (or even register for our Early Bird auction, if you haven’t already).