Decentralization: How Tellor does it.
- No ICO or Pre-mine
- Fair Distribution
- Permissionless Nodes
- Decentralized Governance
From inception Tellor has prioritized being as decentralized as possible. But this concept of “decentralization” is pretty broad, and using the term as a slogan holds little weight without providing specific details. This blog post aims to concisely provide these details and more insight on the ways in which Tellor does this decentralization thing, and why. As we shift to a more DAO-like structure these efforts and decisions will be the foundation of making it possible for our community to run the protocol. Without further ado here’s how Tellor does decentralization:
No ICO or Pre-mine
A fair launch of a token is pivotal to the future abilities to become a decentralized project. ICOs were anything but fair.
In a nutshell, for an ICO (initial coin offering) a project would write a whitepaper describing the project they intended to build, pre-mine (create out of thin air) millions of tokens, set a large amount aside for the team, and pre-sell the rest at a discount to VCs and general public, then get listed on exchanges and dump the market. They would raise millions of dollars before they wrote any code. Tellor was built in the wake of the ICO craze and so we were keenly aware of the issues of them: no transparency, improper treasury management, lack of long term incentives, unfair token distribution, and more. We chose to fund our project in a way that required us to deliver, have long term commitment to the project, and not end up with the majority of tokens. So we chose a dev-share. In our case, we get 10% of the minted reward tokens that fuel the mining/data reporting network.
Fair Distribution and DEXes
Without a pre-mine the Tellor oracle network launched to mainnet with effectively zero supply. As mining events occurred, new tokens were minted every ~10 minutes. Anonymous people would hear about our new project, join our community and ask to participate as a miner and it spread from there. 90% of the tokens went to the miners. We never pursued paying for exchange listings or hiring market makers but preferred the true organic liquidity that DEXes provided even if it made it difficult for whales to buy large amounts. For more on our thoughts about this see our article about the delusion of Liquidity.
The spirit of open-source and transparency is a strong value held by the crypto-sphere in general. This value is deeply ingrained in the fabric of the Bitcoin community. Equal access to the infrastructure that operates the public ledger is seen as a public good. Unfortunately this value has been lost on many in the crypto community at large, and some oracles. They may, for example, include a permissioned structure (whitelisting) to participate as a node and/or to use the data. By doing this, you are creating a chokepoint of trust where an entity’s discretion is required to give permission. The Tellor oracle network is open and anonymous to anyone who wants to buy and stake TRB in order to participate as a Data Reporter and once the data is on chain is open to any smart contract to read.
Decentralized governance implies that control over the protocol isn’t beholden to any small group or single entity, even if benevolent. Tellor uses token weighted voting and although this is not the perfect solution for governance, we do a couple very important things right: First, we do not hold an “admin key,” which would render any other decentralization efforts pointless. Secondly, as mentioned, we did a fair token distribution at launch, no ICO or premine, and so the Tellor core team does not hold a majority share of the token supply, in fact we currently hold only ~4.5%. The current quorum for passing governance proposals is 10% and so we can not unilaterally pass things through.
We think the best way to grow a strong and engaged community is to include them and make public most of what we are doing. This is the heart of our “We are Tellor” motto. Since Tellor launched in 2019, we’ve done weekly community calls giving updates on what we are working on, and recently greatly increased our transparency by moving most of our internal development and business discussions, from private telegram chats to our public discord channel.
If you find our approach unique and meaningful, please join our discord and introduce yourself — you are among friends.