Signal Providers for the Flare Network
Spark (FLR) and F-Asset (i.e. FXRP, FLTC, FDOGE, FXLM) holders alike are able to delegate the detachable votes associated with their FLR and F-Assets to the Flare Time Series Oracle (FTSO), which is the price feed mechanism for the Flare Network. Spark holders will earn risk-free rewards for this action, while F-Asset holders are incentivized to participate in the FTSO to provide accurate price feeds for smart contracts. However, the technical skill to do this may be beyond the scope or time allowances for most retail holders creating a marketplace for vote delegation services. Thus, signal providers are already creating user-friendly services that require a small fee to delegate FLR and F-Asset votes through. Additionally, signal providers are considering providing a reward on their own volition to F-Asset holders for using their service to gain more voting power. Incentives will be delivered to vote delegators who are in the median 50% of data estimates for a given times series of the FTSO. These rewards will be delivered in the form of FLR through the Flare Network inflation mechanism, the FTSO Rewards Pool.
Considerations for delegating votes to Signal Providers
Is the signal provider an already existing firm or new to the blockchain space?
Some signal providers will be new entities formed by individuals looking to capitalize and participate in a brand new smart contract network. Other signal providers will be entering the space as already established entities in the blockchain industry. Signal providers that have already built products and projects on other blockchains will allow you to research their past work and how successful they were in said work, which can be used to extrapolate their performance to the Flare Network. However, just because a signal provider is new to building and working in the blockchain space does not mean they will not be effective signal providers.
Is the signal provider an exchange or CeFi firm?
If the signal provider is an exchange like Bitrue or some other CeFi related-firm looking to participate in the Flare Network, they may require you to stake your FLR with them in exchange for a fixed interest rate. While knowing the interest rate you will receive over the course of the year can be comforting, it also could mean that you are leaving a lot of yield on the table as this caps the upside of participating in the Flare Network. However, utilizing an exchange or CeFi firm for your yield needs could prove to be a solid proposition for those looking to earn some yield on their capital without having to worry about the actions necessary to partake on Flare Network.
Is the signal provider active in the community?
Signal providers that are engaged and active in the community gives users an opportunity to evaluate their knowledge of the Flare Network and insight to the thinking behind the team. Additionally, some signal providers have already created programs to display their signals to the FTSO on their respective websites allowing you to compare to some of the more reliable price oracles currently in production. Some signal providers have also already created helpful tools for the Flare Community to participate in various beta programs prior to launch.
What is the success rate to fee ratio for a given signal provider?
While some signal providers may look enticing due to lower fee offerings, it will be important to compare the fee to the actual success rate of a given signal provider earning rewards. You can use the following formula to help you compare service offerings from the various signal providers:
1 * success rate * (1 – fee rate)
Unfortunately, this metric will not be helpful until enough data can be collected on the success of each individual signal provider.
How much voting power is associated with the signal provider?
The more voting power an individual signal provider has the greater the chance that some of their price data estimates will be in the median 50% of all data put through for a given time series. However, if individual signal providers begin accruing significantly more votes behind them, this can lead to the FTSO becoming more of a centralized oracle, which is the opposite goal of what Flare Network’s is trying to create with this participation-based rewards mechanism to ensure decentralized, accurate pricing of external assets on the Flare Network.
Does the signal provider offer additional bonuses for delegating votes to them?
While FLR is the only asset that can actually earn rewards through the FTSO, this does not mean that F-Asset voting is not important. Therefore, signal providers may choose to offer certain benefits such as decreased fees, NFTs, or additional services for F-Asset holders who delegate their F-Asset votes to a particular signal provider. This can open promote healthy competition amongst the signal providers especially in cases where additional offerings can overcome any lower success rates.
Is the signal provider participating in each price data time series in the FTSO?
This will be a lesser thought of consideration, but it is highly important in choosing a signal provider. As the FTSO utilizes randomness in disbursing the rewards from it, then users may want to look to utilize signal providers participating in every price date time series to ensure they have maximum exposure to the FTSO rewards. For each closing of the FTSO, it will randomly select one time series to distribute rewards to. Therefore, if a signal provider is not participating in each time series, then they will miss out on some earning possibilities.