Oracles: What Are They and How Are They Going to Overhaul Sports Betting?
Organizations such as financial institutions and news media groups are starting to recognize the value of allowing a community of independent information providers decide on what is true and not true.
Truth in itself has become a commodity when voluminous transactions depend on it. For instance, take the famous story of Rothschild, who sent a rider to the battle of Waterloo.
Upon the impending loss Napoleon was about to face, Rothschild’s agents raced back to the London stock exchanges to inform the banker who then sowed disinformation by using his vast reputation as a prudent financier to signal to the market that Napoleon in fact won the battle.
The result was that Rothschild short sold bank notes intentionally and made a fortune buying them up on the cheap before the news showed up the next day. I admit to admiring this level of skullduggery simply because it illustrates so perfectly the problem of trust in financial markets:
- Social reputation is a most unreliable mechanism for finance. You should never trust a centralized source of data; and
- The more information separated from the direct evidence the more hazardous the data is to finance.
The blockchain fixes these problems by introducing sources of data we call an Oracle.
The Definition
An Oracle is a source of ensembled data that is trusted via financial accountability.
Ensembled data means, in the instance of the FansUnite Protocol, that we collect information from a minimum amount of oracles to resolve a game. Otherwise, the oracle, or information source, would just be centralized.
At https://fansunite.com/, our protocol puts a value on truth by attaching financial incentives to these sources of data. If your sports data is useful and resolves our smart-contracts, which escrow the betting volume, you get rewarded.
The tokenization of the source data used to perform computations and resolve decision logic opens the doors for fans to decentralize truth and be held to account for their opinions. The accountability takes the form of financial liability and increased returns when network behavior is optimal.
The Oracle Mechanism
An Oracle in the FansUnite Protocol acts in the following manner:
- The Oracle acquires FansUnite Protocol Tokens and then stakes them proportionately to the volume on each sports betting matchup;
- The Oracle is free to provide data via a client or directly to a repository;
- By punishing an untruthful oracle by giving his tokens to the truthful Oracles, we trim down careless agents;
- Scaling the punishment higher than the reward regularizes the network;
- Oracles resolve when there are enough agents with high enough reputation to trigger the conditions of resolution. Time is penalized, naturally; and
- As the Oracle’s accuracy and consistency increases, the rate that they can rake from the volume bet increases to a maximum.
What an Oracle Looks like
An Oracle at this time is a clientside JavaScript application that provides automated and manual mechanisms for providing data.
For common outcomes like score, over-under and spreads, the score can be automatically fed from an information source (at your own risk) and staked with an algorithm that pushes a message to the Protocol.
For more complex bets like a custom prop, we will allow manual entry of stakes and bet resolution data.
Once your data is entered into the queue, the quorum waits for enough stake and reputation data to accumulate before it closes off the consensus and resolves the smart contract with the dataset.
That is really it. Each result will need a number of oracles of a certain reputation to execute the smart-contract and compensate those who won the sports bet.
The FansUnite Protocol Oracles solve the problem of social engineered opinions by tokenizing and putting a measurable value on truth.
In sports betting where finalized truth is tantamount to money, the blockchain resolves the reputation problem by financially auditing truth. With increasing good behavior comes increasing financial reward.
This approach ensures data is as accurate as possible by eliminating lazy agents from the consensus. Importantly, the more degrees of separation between court-side data and an Oracle, the more chance that the Oracle could rapidly forfeit a disproportionate amount of currency and lose their ability to rake.
On the FansUnite Protocol it pays to be sure!
Stephen Rothwell
FansUnite HeadTrader and Machine Learning Specialist
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