Introducing Telepathy Network: The Oracle of All Inscriptions
Inscriptions: The Newtype of Crypto Assets
Crypto assets are supposed to be censorship-resistant and ‘decentralized’. Unfortunately, most of the crypto assets we discuss today completely depend on smart contracts. For a long while, we were led to believe that the utility and application of cryptocurrencies could only be achieved through the assistance of ‘smart contracts,’ which are programs stored on blockchains and executed when predetermined conditions are met. Despite having trust in a highly decentralized blockchain, we often find ourselves assuming the safety of a smart contract and trusting its output. In Q1 2022 alone, we witnessed a staggering loss of $682 million due to smart contract breaches.
Smart contracts also stand as the primary cause of the current scalability and liquidity fragmentation issues between the Ethereum ecosystem and numerous other smart-contract-driven blockchains. In response to exorbitant gas fees, scaling solutions such as Layer 2 or even Layer 3 have been introduced, exacerbating the already severe cross-chain security and liquidity fragmentation challenges.
However, a transformative shift has occurred with the advent of inscriptions like Ordinals or Ethscriptions — a metaprotocol that stores data on transaction blocks. This innovation makes data universally accessible through queries via an indexer, irrespective of the underlying blockchain. Inscriptions inherit the immutability of their blockchain without introducing any executable vulnerabilities, relying instead on the indexer for bookkeeping — essentially the inverse of smart contracts. With the support of an indexer, cross-chain transactions can be executed seamlessly without the need for asset bridging
Telepathy: A Decentralized Indexing Network
However, indexers have traditionally been centralized, necessitating the implementation of measures to prevent a single point of failure and establish a robust validation mechanism. This is where Telepathy comes into play — a decentralized indexing network that acts as the oracle for inscriptions across multiple blockchains.
Telepathy ensures the validation and fraud-proofing of indexers while enhancing their scalability through the incorporation of a TELE layer. This layer operates above and is compatible with supported inscription protocols, dictating the inscription formats and parsing standards, as well as their corresponding execution layers (L1s or L2s). By doing so, Telepathy addresses the inherent challenges of centralized indexers, providing a decentralized solution that safeguards against potential failures and fraudulent activities within the inscription ecosystem.
This architecture enables Telepathy to serve not only Ordinals but also various other inscription standards, maintaining a unified and extensible pattern across multiple blockchains.
It’s important to note that Telepathy is not a standalone blockchain; instead, it offers a fraud-proof validation mechanism akin to Optimism. Simultaneously, it serves as a settlement layer for indexers. Within the network, there are two distinct types of market participants:
Pillar Nodes: Nodes that provide indexing results
Initially composed of 2² members, the pillars self-expand to 2¹⁶. Compared to Royal Knights, becoming a pillar has higher thresholds. On one hand, the introduction of new pillars requires the approval of existing ones. Before reaching the critical number of pillars, consensus is ensured by Practical Byzantine Fault Tolerance (PBFT); after reaching it, it will be secured by PoS.
On the other hand, pillars have higher device requirements. Their high configuration is the cornerstone for achieving ultra-low latency and high stability in the Telepathy indexing network.
Hermit Nodes: Nodes that validate indexing results
These nodes act as the gatekeepers of the Telepathy network, holding the Hermit NFT and staking a specific amount of $TEL3 and $PATH while running a special client to monitor all “fraudulent behaviors” within the Telepathy Network. They provide checks and balances with the pillars. Hermit Nodes and Pillar Nodes get rewarded via Indexing Mining, which is an incentivized validation mechanism to safeguard the Telepathy Network.
The number of Hermit Nodes will increase along with the expansion of indexing capability. Even in the unlikely event that the pillar’s malicious nodes exceed the limit, the Hermit clients can instantly detect these issues and alert the entire network. Mathematically, the probability of bribers corrupting 51% of all Hermits is less than 0.0001%. Thus, Hermit Nodes are crucial guarantors of decentralization in the Telepathy network.
Indexing Mining
The incentive system for providing indexing services and validation is referred to as Indexing Mining. To establish a Nash equilibrium and ensure the effectiveness of this system, the Telepathy Network will introduce three types of assets:
- $TEL3: This represents the governance inscription of Telepathy, structured as Ordinals BRC-20.
- Hermit NFT: An Ordinals NFT that symbolizes the participation of Hermit Nodes within the network.
- $PATH: This utility token, implemented as an ERC-20 token, serves the purpose of settlement within the Telepathy Network.
For Pillar Nodes:
- An indexing session is an Epoch. One Epoch every 10 minutes
- A validation session is a Slot. One slot every 12 seconds
- Pillar Nodes will have to meet the staking requirements as well as the client operating requirements
- Pillar Nodes will be subject to validation challenges by Hermits. Failure in slot fulfillment or fraud-proof validations will result in slashings of staked assets
For Hermit Nodes:
- A Hermit Node must hold Hermit NFT, and fulfill the minimum staking and client operating requirements
- Hermit Nodes can challenge Pillar Nodes for frauds detected. Successful challenges will result in earnings from slashing on Pillar Nodes’ end
- Vice versa: a failed challenge will cost staked assets by the Hermit Node
- Hermit Nodes can receive a full Epoch reward from a successful full Epoch validation
- Failure in slot fulfillment will result in slashings of staked assets
Omnichain Scaling & Programmability via TVM
If Ordinals largely go without smart contracts, can we still achieve the same programmability as EVM?
Yes, by making indexers programmable.
Inscriptions essentially function as ‘notes’ on the blockchain, and reading and parsing their contents are foundational for all inscription transactions on-chain. Telepathy, being an indexing network protocol and not an application, utilizes an off-chain virtual machine known as ‘TVM,’ which can be easily deployed to Pillar Nodes.
With TVM, applications based on Ordinals can seamlessly run on it, functioning similarly to applications on the EVM. Although the outputs of TVM follow a ‘created off-chain, verified on-chain’ approach, as opposed to the ‘created on-chain, verified on-chain’ doctrine of smart contracts, the validated results of TVM remain trustworthy. Hermits play a crucial role in validating the outputs of TVM, ensuring their reliability.
TVM can be considered a scaling solution for Bitcoin and other supported networks without introducing additional vulnerabilities associated with cross-chain bridges, liquidity fragmentation, or the need for extra user onboarding efforts.
Building Our Own Paradigm
For years, the crypto community has grappled with the challenges of exponentially growing complexity, wheel reinventions, and a subtle concentration of say. Inscriptions like Ordinals mark just the beginning of a renaissance, prompting us to reconsider how we engage with crypto in a fair, open, and censorship-resistant manner. This marks a rediscovery of the true meaning of ‘decentralization.’
The Telepathy Network represents our experimentation with uncovering alternative possibilities for crypto applications. We are committed to collaborating with an open community that shares our vision and values.
Amid this transformative period, we are dedicated to embracing change and are resolute in riding the wave of innovation.
