Flare Time Series Oracle Intro
The Flare Time Series Oracle (FTSO) is the decentralized on-chain mechanism that provides time series data estimates to the Flare Network to ensure accurate pricing. As the native asset, Spark (FLR), is not used to ensure the safety of the network, it opens up many avenues for FLR to be utilized throughout the ecosystem. FLR comes with two detachable features with one of these serving as a way to provide price data estimates to the FTSO. FLR holders who provide accurate price data estimates to the FTSO will be rewarded with additional FLR through the FTSO inflation mechanism. Aggregating external price data onto blockchains has been penned as the Oracle Problem, which Flare aims to solve via the FTSO through incentives and decentralization.
Why the need for the FTSO?
The Flare Network is built to be a decentralized blockchain; however, for the smart contracts on the network to function properly, it has to rely on external price data that may be centralized. If the Flare Network were to utilize an exchange’s price data, then this would render the system centralized itself. Thus, the Flare team built the Flare Time Series Oracle (FTSO) as a mechanism to decentralize the price data estimates coming onto the chain.
Who contributes to the FTSO?
F-asset (i.e. FXRP, FLTC, FDOGE) and FLR holders alike will be the contributors of price data estimates to the FTSO. FLR holders who delegate their detachable vote to the FTSO are contributing to the decentralization of external price feeds into the Flare Network and will be rewarded in FLR for providing accurate price data estimates. F-asset holders will not be rewarded by the FTSO for their contribution, but will be assisting in the integrity of the underlying smart contracts used to create their f-asset position. To accomplish this, both asset types can delegate their votes through a signal provider.
How to earn FLR rewards from the FTSO?
As a FLR holder delegating their detachable vote to the FTSO, each holder will be able to earn rewards in FLR, when they provide accurate price data estimates. For a price data estimate to be considered accurate, the feed must be in the median 50% of all price data estimates for each given FTSO time series closure, which happens on a per minute basis. While f-asset holders who contribute to the FTSO do not earn the FTSO rewards, it is possible a dynamic marketplace will be created by signal providers to accrue more voting power resulting in payment to f-asset holders delegating their votes to a signal provider.
FTSO as an inflation mechanism
The Flare Network tokenomics will be acting differently that many other smart contract networks as the total token supply of FLR is not capped. This means that rather than FLR serving as a deflationary asset it will be able to have the supply increased to scale to the growing value on the network. However, unlike inflation in traditional markets where the rate is controlled by a central bank, the inflation rate of FLR will be a governance parameter set by the holders of FLR.
The FLR inflation rate is set to start at 10% of the originally minted 100B FLR supply per year for the first six months of Flare’s existence. After six months, the inflation rate going forward will be up for a governance vote. The FTSO rewards will serve as the mechanism for the FLR token inflation to be distributed to actors contributing to the integrity of the ecosystem’s price feeds. Thus, non-beneficial participants will not be rewarded by the inflation of FLR and in a sense over time have their FLR holdings diluted.
Additional FTSO materials
Flare Blog | FTSO: a breakdown