The Quest for True Decentralized Oracle: Witnet vs. Tellor
Decentralized oracles stand as indispensable pillars within the blockchain ecosystem, skillfully connecting the realms of real-world data and decentralized applications (dApps). Functioning as reliable intermediaries, these oracles empower smart contracts by facilitating access to off-chain data. This dynamic capability enables smart contracts to seamlessly execute actions based on real-world events and information, enhancing the versatility and practicality of decentralized systems.
Significance of Decentralized Oracles
- Eliminating Single Points of Failure: Traditional oracles, managed by a single entity, open the door to potential manipulation and downtime. Contrastingly, decentralized oracles distribute the tasks of data retrieval and validation among a network of independent nodes. This approach significantly enhances the system’s resilience, making it more resistant to tampering.
- Enhancing Trust and Transparency: Decentralized oracles contribute to a trustworthy and transparent environment by utilizing consensus mechanisms. These mechanisms verify the accuracy and authenticity of data, creating a transparent data ingestion process. This commitment to openness fosters trust not only among users but also among stakeholders in the system.
If you’re a supporter of decentralized oracles, chances are you’ve encountered Witnet and Tellor in your exploration. In this instalment of the Witnet Oracle Comparison Series (WOCS), we’ll delve into the distinctions and parallels between Witnet and Tellor.
It’s crucial to highlight that Winet 2.0 is still in development and hasn’t gone live yet. However, the Witnet Oracle Comparison Series aims to draw comparisons with other blockchain Oracle projects, offering insights into the anticipated potential of Winet 2.0.
Now that we’ve grasped the significance of decentralized oracles in the blockchain realm, let’s shift our focus to understanding Witnet and Tellor. In this series, we’ll explore Witnet and Tellor as integral components of the Decentralized Oracle Network:
Decentralized Oracle Network
Witnet and Tellor share a common goal as blockchain-based projects that strive to offer decentralized oracle services, tackling the challenge of integrating real-world data into blockchain networks. Despite their shared objective, they diverge in their approaches and features. Let’s delve into a concise comparison of Witnet and Tellor within the context of a Decentralized Oracle Network:
Witnet
Witnet 2.0 signifies a major advancement as it evolves into the first-ever Layer 1 Proof of Stake Oracle. Pioneering a focus on security and decentralization, Witnet stands out as the leading and only genuinely decentralized Oracle network. Essentially, Witnet is meticulously designed as a layer 1 blockchain oracle with a dedicated mission — to securely deliver off-chain data onto any smart contract network in a permissionless and decentralized manner.
Tellor
Tellor stands as a decentralized, transparent, and permissionless Oracle protocol, offering smart contracts timely access to data whenever required. In essence, it serves as a secure and trustless avenue for Ethereum network smart contracts to obtain off-chain data. By decentralizing the on-chain integration of real-world data, Tellor ensures immutability and complete permissionlessness in its operations.
Witnet is constructed with a focus on achieving true decentralization, while Tellor is purposefully designed as a decentralized oracle network. Both platforms operate on a permissionless basis, allowing individuals to engage in resolving data queries almost instantly, without the need for prior approval. This emphasis on permissionlessness underscores their commitment to open and inclusive participation in their respective ecosystems.
Let’s delve deeper into the distinctive features of Witnet and Tellor in the context of their blockchain functionalities:
Blockchain
Witnet
Witnet is constructed on its dedicated Layer 1 blockchain, and it boasts a blockchain-agnostic nature, allowing seamless integration with various blockchain platforms. Unlike being confined to a specific blockchain, Witnet stands out as the sole Oracle operating on its distinct Layer 1, purposefully designed to address the Oracle problem with unparalleled focus and efficiency.
Tellor
Tellor, in contrast to being blockchain-agnostic, is primarily designed for Ethereum-based applications. However, it showcases versatility by being compatible with any Ethereum Virtual Machine (EVM) chain, as well as Algorand. The Tellor Layer, engineered on the Cosmos SDK, is specifically crafted to manage different data types across a spectrum of emerging chains. While Tellor has its roots in Ethereum, its adaptability extends to various EVM-compatible chains and beyond, demonstrating a flexibility that caters to a diverse blockchain ecosystem.
Compatibility with the Ethereum Virtual Machine (EVM) doesn’t inherently render a project or protocol fully blockchain-agnostic. Rather, it signifies the ability to operate on any blockchain that supports the EVM. This includes not only various Ethereum forks but also other blockchain platforms that implement the EVM. True blockchain-agnosticism would imply seamless integration and functionality across a broader range of diverse blockchain architectures beyond the EVM ecosystem.
Let’s delve into the distinctive features of Witnet and Tellor in terms of their consensus mechanisms:
Consensus Mechanism
Witnet
Witnet’s transition to Witnet 2.0 marks a pivotal moment in its development, particularly with the shift from a hybrid Proof of Work/Proof of Stake system to a dedicated Proof of Stake mechanism. This strategic evolution underscores a commitment to a more stakeholder-centric approach in determining consensus. Importantly, this move aligns with the prevailing industry trend favouring energy-efficient and environmentally friendly consensus mechanisms, reflecting Witnet’s dedication to sustainability and innovation within the blockchain space.
The Witnessing Network
The Witnessing Network welcomes participants globally, allowing individuals from anywhere in the world to become Witnet nodes or witnesses. These nodes, ensuring anonymity, have staked a specific amount of the network token, $WIT. This staking serves as a commitment that participants could potentially lose if they provide inaccurate or false information. The decentralized and global nature of the Witnessing Network contributes to its robustness and reliability in validating and securing data within the Witnet ecosystem.
How it works?
Witnet’s consensus mechanism is orchestrated by a sophisticated algorithm that selects anonymous nodes. These nodes are required to stake WIT tokens to participate, offering a customizable approach to decentralization levels. In Witnet 2.0, a node’s eligibility is determined by a function called “Power,” derived from its total stake multiplied by stake age. This Power is reset upon task completion, ensuring a continual rotation of nodes to prevent the concentration of control.
To incentivize honest behaviour and discourage malicious actions, nodes face economic consequences, risking the potential loss of staked funds. The commit and reveal scheme further enhances data integrity in data requests. Nodes post collateral, commit to the provided data, and later reveal it publicly. This process adds an extra layer of trustless participation. Notably, Witnet encourages broad and trustless engagement by allowing anyone to run an anonymous node in the network.
Tellor
Tellor utilizes a hybrid consensus mechanism, incorporating elements from both Proof of Work (PoW) and Proof of Stake (PoS). The intention, as outlined in the Tellor X Whitepaper, is to phase out the Proof of Work mining component. This strategic adjustment indicates a conscious move towards a consensus model that is not only more energy-efficient but also places a greater emphasis on stakeholders’ participation. Such a shift aligns with broader industry trends that prioritize sustainability and decentralized engagement within blockchain networks.
The Reporting Network
Tellor embraces global participation, allowing individuals from any corner of the world to become data reporters and contribute information to Tellor’s databases. However, it’s crucial to note that staked Tellor network tokens, $TRB, are at risk of being lost in the event of incorrect data submission. This mechanism ensures a commitment to data accuracy and incentivizes contributors to provide reliable and truthful information to the Tellor network.
How it works?
The Tellor system operates on a decentralized and participatory model where anyone can deposit a stake and contribute data. During a specified timeframe, individuals have the opportunity to pay a dispute fee to challenge any piece of data provided. The resolution of the dispute is determined through a voting process involving Tellor stakeholders. If the data reporter loses the dispute, their stake is transferred to the party raising the dispute. This structure establishes a robust system that penalizes malicious actors while rewarding those who contribute accurate and reliable information to the Tellor network.
For a more detailed description, please see Tellor at a Glance or Tellor the Basics.
The introduction of Witnet 2.0 signifies a substantial enhancement in decentralization, robustness, and security. This upgrade positions Witnet on a trajectory to emerge as the pioneering true Proof of Stake Oracle. This evolution underscores a commitment to advancing the network’s resilience and security while embracing a Proof of Stake consensus mechanism, marking a significant milestone in Witnet’s journey.
Let’s dive further to explore the native assets of Witnet and Tellor along with their respective utilities:
Native Asset Utility
Witnet
The $WIT coin plays a multifaceted role within the Witnet protocol, serving as the native currency for network fees on Layer 1. Additionally, $WIT is utilized for staking on nodes, a process integral to executing tasks within the network. The implementation of economic penalties, where nodes stand to lose a portion of their staked amount for misbehaviour, creates a potent incentive for honest behaviour, thereby bolstering the overall robustness of Witnet.
This staking methodology significantly contributes to the network’s high level of security. In fact, it is estimated that malicious nodes would need more than the total supply of $WIT to substantially compromise a protocol relying on Witnet data feeds. This robust security framework is a testament to the effectiveness of the staking mechanism in deterring malicious actions and maintaining the integrity of the Witnet network.
Tellor
In the Tellor protocol, security and the encouragement of active data reporting are achieved through the creation of a token known as Tellor Tributes (TRB). Reporters are required to stake TRB to partake in the process of placing values on-chain. Additionally, users have the option to tip TRB tokens as an incentive for timely updates pertaining to the data their smart contracts depend on. To further incentivize the liveness of the reporter network, the Oracle contract on the Ethereum mainnet disburses time-based rewards.
To deter malicious behaviour, the protocol has a dispute mechanism in place. Reporters can be disputed, and a portion of their stakes can be slashed by any TRB holder willing to contribute a dispute fee. This mechanism adds an extra layer of security and accountability, ensuring the reliability and integrity of the data reported by the Tellor network.
The native assets of Witnet and Tellor play pivotal roles within their respective ecosystems, performing various essential functions.
Let's delve into the tokenomics of Witnet ($WIT) and Tellor ($TRB):
Tokenomics
Witnet
Key information about the Witnet token ($WIT):
- Maximum Supply: 2,500,000,000 $WIT
- Circulating Supply: 1,276,232,717 $WIT (as per Coingecko)
- Market Cap: $9,442,338
For a more detailed description, please see: Witnet Price
Tellor
Key information about the Tellor Tributes token ($TRB):
- Total Supply: 2,556,944 $TRB
- Circulating Supply: 2,511,203 $TRB (as per Coingecko)
- Market Cap: $220,939,062
It’s notable that Tellor does not have a maximum supply, which means that new tokens may continue to be mined or added to circulation over time.
For a more detailed description, please see: Tellor Tributes Price
Exploring the numbers
Let’s have a little fun with the numbers. To explore the hypothetical scenario where the Witnet token ($WIT) had a market capitalization equivalent to that of the Tellor token ($TRB):
Calculating this would give you the hypothetical price of $WIT in this fun scenario. Keep in mind that this is purely for entertainment purposes, and cryptocurrency prices are influenced by various factors in the market.
As we wrap up this instalment of the Witnet Oracle Comparison Series (WOCS), let’s dive into some compelling statistics that underscore their relevance:
Other Statistics
Other noteworthy metrics in the realm of blockchain oracles include factors such as Total Value and the number of Secured Protocols.
Witnet
Witnet has demonstrated its robustness by safeguarding hundreds of millions in on-chain value across more than 300 data feeds spanning over 28 blockchain networks. As reported by Defillama, the key metrics are as follows:
Total Value Secured: $62.18m
Protocols Secured: 12
Tellor
Tellor’s statistics are not publicly disclosed, with the team asserting that accurate calculation is challenging and that such information would lack meaningful insights. For further clarity, please refer to the quoted message included in the screenshot from the Tellor Discord.
In the grander scheme, both Witnet and Tellor play integral roles in propelling the evolution of decentralized oracle technology. Their contributions collectively forge a path toward a more trustless and secure blockchain ecosystem.
If you didn’t have time to read “The Quest for True Decentralized Oracle,” here’s a quick Comparison Table for Witnet vs. Tellor.
In essence, Witnet and Tellor share a common goal of offering decentralized Oracle services. However, Witnet distinguishes itself by being blockchain-agnostic, prioritizing privacy, and employing a specific protocol for consensus. In contrast, Tellor is specifically tailored for Ethereum-based applications but exhibits compatibility with any EVM chain, including Algorand. Moreover, Tellor introduces its native token (TRB) for staking and governance within the network. The selection between the two may hinge on individual use cases, platform preferences, and the specific features sought for a given project.
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