No pre-mine, no ICO. Why we went for a Dev-Share

Tellor Core
Apr 20, 2019 · 4 min read

What we do at Tellor

At Tellor we’ve created a decentralized oracle that provides the most secure solution for those that need high value off-chain data in their smart contract and the data output is properly secured by a hybrid PoW/PoS consensus mechanism.

Decentralized oracles in general allow smart contracts to escape the current boundaries of blockchains as a closed-off ecosystem, and truly interact with the “real world” by obtaining information about it. Our vision is to be the standard source of off-chain information for the DeFi market and we see our product as a necessary contribution to supporting the decentralized ecosystem.

To learn more about Tellor be sure to check out our website and all available resources.

The problems of pre-mining or ICOs

When it comes to ICOs nowadays, a lot of issues prevail: non-transparency, improper treasury management by the core team, lack of incentives for long term success, unfair early investor terms and much more. One of the most pressing issues though, shared by ICOs and by pre-mine projects alike, is that these projects get a big chunk of money before ever showing their ability to execute on a larger scale. To be fair, these teams do need to project their spendings into the future for the remainder of the projects existence and account for unpredictable costs. Therefore, raising as much as possible under current investor sentiment does make some sense. This problem mainly exists because it’s so hard to structure a fundraise with several rounds in crypto due to the fast liquidity of tokens. At this point in time, the projects generally haven’t showed any of their capabilities to execute on their strategy and roadmap and most of them don’t even know whether it’s feasible or whether there’s a real product market fit.

The crypto space should end the idea that projects decide on how much money they give themselves and how much money they need to execute before having done anything significant.

Fortunately for those reading this, we love proving ourselves. That’s why at Tellor we’ve taken a different approach: the sustainable dev-share.

What is a dev-share?

A dev-share is a structure in which a portion of the block rewards goes to the treasury of the founding team in order to finance the team’s efforts. In Tellor’s case the dev-share is 10%, meaning that 10% of all mining rewards will not go to miners but to the Tellor team instead. This is not only a long-term structure to support the project, but also aligns incentives between miners and the Tellor team, like maintaining a decent token price for profitable mining and a secure network.

Problems of other dev-share project structures

Other projects that decided to go with a dev-share have experienced problems with it in the past. The most prominent example is ZCash which was forked several times in order to remove the dev-share. The problem with ZCash was not the idea of the dev-share itself but the amount that the team allocated to themselves. In general, ZCash takes a 20% share of all mining rewards. In total 57.2% of that amount goes to the team, while 16.5% goes to investors. Furthermore, the CEO of ZCash alone gets 0.9% of all new coins, which is 2033 ZEC monthly. The problem is quite clear, right? The underlying idea of the structure isn’t flawed. The flaw is how ZCash decided to structure it internally. Too much money goes to the team instead of towards improvements of the project. Other projects with that structure only face problems if they do not deliver properly and therefore get money for doing nothing significant!

Further examples of dev-share structures include Decred, Dash, Amoveo and Beam.

Designing the share in a fair way in which the development of the project itself will benefit and not only the founders is crucial in our opinion and we will constantly strive to achieve that.

Why we chose a dev-share

Now we have skin in the game!

A dev-share allows us to get the necessary financing we need to create a sustained and secure oracle network, but only if we really deliver a cutting edge product that’s needed. If we don’t, then the token value will plummet and there won’t be any interest in Tellor, be it miners or actual projects using the oracle. So instead of the project dying while already having raised millions in dollars, we would be left without anything in hand and a failed project. This commitment and proper incentive is what we are after. And our own belief in the success of the project strengthens our confidence to choose the harder route.

A dev-share is not only a commitment to our project, but also to our community!

This structure also helps us to tackle the issues that currently exist with cryptocurrency fundraises. Only such commitment can really build a long-term committed community while we can #buidl our product and get actual usage for it. For us, it means everything or nothing!

If you want to learn more about what we use the dev-share for check out our whitepaper.

If you’re generally interested in Tellor or want to incorporate our oracle system in your smart contracts, then be sure to join our Discord.

Tellor

Tellor is the most secure and simple Decentralized Oracle solution for smart contracts that need high value off-chain data.

Tellor Core

Written by

Tellor

Tellor

Tellor is the most secure and simple Decentralized Oracle solution for smart contracts that need high value off-chain data.

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