Coin Report #47: Tellor

Coin Report #47: Tellor

CoinMarketManager


N.B: The following Coin Report on Tellor is community-selected.

Welcome to the 47th Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of Tellor. This will be comprised of an analysis of a number of significant metrics, an evaluation of the project’s community and development and an overview of its price-history. The report will conclude with a grading out of 10. I hope you enjoy the read!

Introduction

It has been quite some time since my last Coin Report was published, with this one having been in the works for a little over a month now. As I’m sure you aware, the circumstances have been utterly unforeseen and that has affected my schedule somewhat, hence the delay in publication of this report on Tellor. Nonetheless, I am very much excited to share my research and to begin publishing more regularly again.

I hope this report will prove objective where it must be and fair on more subjective matters. For those who’d like to learn a little more about Tellor prior to reading this report, here are some primary links:


Fundamental

General:

Name: Tellor

Ticker: TRB

Algorithm: ERC-20 (Proof-of-Work/Proof-of-Stake consensus)

Sector: Decentralised Oracles

Exchanges: IDEX, Eterbase, BKEX, Bilaxy, Citex, BiKi, Hotbit, Fatbtc, ViteX

Launch Overview

Tellor was conceptualised in 2018 by the team behind Daxia (a derivatives protocol on Ethereum) upon the realisation that there was no decentralised oracle to provide the data points for their derivatives. In August 2019, the team officially launched the oracle on the Ethereum Mainnet, and, in doing so, created the contract for Tributes; the native token for the Tellor decentralised oracle. The project was launched with no premine or ICO, with the team instead opting for a 10% share of rewards on the network in order to continue to fund development.

Price-History Overview

As Tellor has only been in existence for about half a year, there is relatively little price-history available to analyse and there has only been one distinct market cycle that has occurred during this time. Whilst I will certainly be dissecting the price-history in detail in the Technical Analysis section, for now it will suffice to say that TRB formed its all-time high against Bitcoin at 0.00114 BTC in December 2019, a couple of weeks after initial listing on exchanges. This coincides with its USD all-time high of $8.57. Its all-time low was actually printed on the first day of recorded trading at 14,000 satoshis in November 2019.

Project Overview

Despite the somewhat complicated nature of Tellor’s core technology, unlike many projects in this space it has a very clearly defined lane within which it is operating: oracles. To be precise, decentralised oracles on the Ethereum network. Tellor’s purpose is quite simply to provide Ethereum smart contracts with a means by which to directly access off-chain data without relying on centralised data providers, all of which is achieved with an incentivised network of miners that provide the off-chain data to the oracle.

As stated in its whitepaper:

“The Tellor Oracle provides an efficient, trustless and decentralized alternative for off-chain data. It  provides the infrastructure for decentralized applications to query off-chain data by properly incentivising miners to provide data.”

I look forward to assessing its progress in this respect.

Let’s begin with some Metric Analysis:


Metric Analysis:

Below are listed a number of important metrics, all of which are accurate as of 12th April 2020. For anyone reading this who has yet to read a Coin Report, it might be worth reading this section of the first report, where any potentially unfamiliar terms are explained. For any terms or metrics specific to this post, I will provide explanations besides the figures.

Metrics:

General:

Price: $3.678 (53,550 satoshis)

Circulating Supply: 1,085,030 TRB

Total Supply: 1,170,900 TRB

Exchange Volume: $1.257mn ($142,469 excluding potential wash)

Network Value: $3.991mn (581.03 BTC)

Maximum Supply (calculated as Total Supply in 10 years due to no fixed supply cap): 4,061,700 TRB

% of Max. Supply Minted: 28.8%

Network Value at Max. Supply: $14.94mn

Exchange Volume-to-Network Value: 31.54% (3.57% excluding potential wash)

Category: Lowcap

Average Price (30-Day): $4.15

Average Exchange Volume (30-Day): $104,955

Average Network Value (30-Day): $4.101mn 

Average Exchange Volume (30-Day)-to-Network Value: 2.56%

Volatility* (30-Day): -0.2167

Average Daily On-Chain Transactions (30-Day): N/A

Average Daily Transactional Value** (30-Day): N/A

NVT*** (30-Day): N/A

% Price Change USD (30-Day): -41.9%

% Price Change USD (1-Year): N/A

USD All-Time High: $8.57

% From USD All-Time High: -58.2%

Premine % of Max. Supply: N/A

Premine Location: N/A

Liquidity (calculated as the sum of BTC in the buy-side with 10% of current price across all exchanges): 1.192 BTC

Liquidity-to-Network Value %: 0.21%

Supply Available on Exchanges: 33,149 TRB

% of Circulating Supply Available on Exchanges: 3.06%

*Volatility is calculated by taking the average price over the given time-period, calculating the difference between it and the highest price and it and the lowest price over that same time-period, and multiplying those figures together. The closer to 0, the less volatility during that period, and vice-versa. Read this for more on volatility.

 

Supply Emission & Inflation:

Block Reward Schedule: Whilst there is no fixed cap on supply, the Tellor smart contract issues a base reward to 5 miners for every query, with 144 queries per day on average, giving 10-minute block times. The dev team receive a 10% share of the base reward. Currently, the block reward is ~4 TRB per miner per query, with recent inflation adjustments meaning that in roughly a year’s time the base reward per miner per query will be 1 TRB. 

Average Block Time: 10 minutes

Current Block Height: N/A

Annual Supply Emission: ~657,000 TRB (for the following 365 days; after Q2 2021, this will be ~289,000 TRB.) 

Annual Inflation Rate60.55% (reduced to 17% following this next year)

Circulating Supply in 365 Days: 1,742,030 TRB

 

Distribution:

Address Count: 1,228 

Total Supply Held By Top 10 Addresses: 49.15%

Total Supply Held By Top 20 Addresses: 59.27%

Total Supply Held By Top 100 Addresses: 83.78%

Inactive Address Count in Top 20 (30 Days of No Activity): 10*

*Within the top 20 addresses, the 1st-richest has been excluded as it is the Tellor contract from which supply is issued. The 2nd-richest (IDEX), 3rd-richest (dev share Multisig) and 13th-richest (Dex Blue) are all excluded from the inactive address count as these are not relevant for our purposes.

Analysis:

There’s quite a lot here for me to unpack, but unfortunately I was unable to find any data sources for on-chain transactional volume. In fact, there is a data source – Etherscan – but the sheer volume of transactions is unfeasible to navigate as every transfer of the base reward to a miner (plus the dev share) is included in the total transfers, meaning that there were 5,000 transactions for the past 4 or 5 days. At that rate, we could estimate 30,000+ transactions to navigate manually for the month. It would be great if there was an explorer that allowed for filtering of the base reward transfers to remove them from this pool of transactions and thus make analysis of non-mined network demand more clear. Regardless, we can make one assumption of some value based on this: that the network is being utilised at or near its full 144 query per day capacity, as miners are only rewarded for successful data submissions (more on this later).

Following this, before we move on to more substantial metrics, I’d like to briefly highlight Tellor’s 30-day Volatility of -0.2167.  This is the 5th-highest degree of volatility found among prior reports and is not suggestive of an accumulation range, at least not against the Dollar. That said, we must remember that Bitcoin itself experienced one of the most volatile days in its history over the past month and that will have had a profound effect on the volatility of the USD value of all altcoins across a 30-day period.

Now, let’s take a look at the remaining General metrics before moving on to Supply Emission and concluding with Distribution:

Some of the most significant metrics to evaluate for speculators are those related to buy-side and sell-side Liquidity. I found Tellor to have buy-side Liquidity of 1.19 BTC within 10% of spot price across all listed exchanges, equating to 0.21% of its Network Value. This places Tellor around the halfway point among prior reports, again not suggestive of any real demand at current prices, but I am aware that it is also not currently listed on any large exchanges, which will naturally lead to lower buy-side liquidity.

Concerning sell-side Liquidity, Tellor was found to have 33,149 TRB available for purchase in the orderbooks across all listed exchanges, equating to 3.06% of its Circulating Supplyplacing it in the top third for sell-side liquidity, although not particularly high among those. This suggests to me that, whilst there is clearly some desire for holders to sell their TRB, it is not overwhelming, much like demand at current prices. Overall, speculation seems relatively low on priorities of the holders of Tellor according to the liquidity metrics.

Tellor is reported to have traded $1.26mn of Exchange Volume in the past 24 hours, equating to 31.54% of its Network Value; an exemplary figure, if only it were real. Given that Tellor is listed on a number of less prominent exchanges, I found that there is a lot of wash trading taking place, making up the bulk of the volume. The real figure is closer to $142,469, equating to a still impressive 3.57% of its network value. This conflicts with some of the liquidity metrics, as it does indicate speculative interest in the token.

More importantly, its Average Daily Volume for the past month was $104,955, equating to 2.56% of its Average Network Value for the same period. It is good to see consistent volume being traded at a relatively high ratio against Tellor’s network value, as this indicates to me that speculators are indeed interested and thus there is potentially some cyclical upside that we can capture here.

Moving onto Supply Emission, I calculated that roughly  will be 657,000 TRB will be minted over the next year (351.82 BTC-worth at current prices). This gives Tellor an annual inflation rate of 60.55%. That said, as explained in the Supply Emission section alongside the data, recent adjustments mean that as of Q2 2021, the inflation rate annually will be 17%, due to the base reward becoming 1 TRB per miner per block, which equates to 5.5 TRB (inclusive of dev share) per block and ~289,000 TRB per year of emission.

However, more  significant is the relationship between this Supply Emission and the Volume metrics mentioned above:

Given that 657k TRB will be minted over the next year, we can work out that the average daily supply emission is 1,800 TRB, or 0.96 BTC-worth at current prices. This equates to ~$6,600 of daily supply emission. As Tellor traded $142,469 of real volume over the past 24 hours, and an average of $104,955 of real volume daily for the past month, we find that Tellor’s average daily supply emission is covered 21.5x by its 24-hour volume and 15.9x by its Average Exchange VolumeFurther, Liquidity of 1.19 BTC covers the average daily supply emission by 1.24x. Liquidity is clearly a potential issue here but speculative volume should do enough to sustain current prices; moreover, the significantly reduced emission schedule should assist here.

Finally, let’s take a look at Distribution:

I found that there are currently 1,228 active addresses on the Tellor mainnet. This is quite a low address count, placing it 6th-lowest among prior reports and indicating that the supply is not particularly well-distributed as of yet with a small pool of owners.

With regards to concentration of supply, the top 10 addresses control 49.15% of total supply; the top 20 control 59.27%; and the top 100 control 83.78%. This is excluding the #1 address, which is the contract address from which tokens are emitted into circulating supply. It is also worth noting that #2 is IDEX, #3 is the multisig wallet owned by the team and #13 is dex.blue; the other 16 addresses appear to be privately-owned.

Within these 16 addresses, 10 were inactive over the past 30 days, indicating that half of the largest holders are content with their position sizes. Most significantly, 5 of the remaining 6 addresses have been increasing position size over the past 30 days, with only 1 address flat and none distributing. The majority of these appear to be miner addresses.

And that concludes this section on Metric Analysis. Onto the Tellor Community:


Community:

There are two primary aspects of community analysis: social media presence and Bitcointalk threads. I’ll begin with the former before moving on to the latter.

Social Media:

Concerning social media presence, there are four main platforms to examine: Twitter, Facebook, Telegram and Discord.

Tellor is present on all platforms except Facebook. To begin, let’s look at the various social metrics that I calculated from the Tellor Twitter account:

Twitter Followers: 2,694

Tweets: 176

Average Twitter Engagement: 2.03%

Facebook Likes: N/A

Facebook Posts (30-Day)N/A

Average Facebook Engagement: N/A

As usual, I will be using RivalIQ‘s social benchmark report for evaluation purposes.

Twitter:

The Tellor Twitter account does not have a particularly large audience, placing 9th-lowest among prior reports. Its engagement rate is better, however, at 2.03%; a common occurrence for projects with smaller audiences. In RivalIQ’s report, we find that the average Twitter engagement rate across all industries is 0.048%, which means that Tellor’s engagement rate is currently 42.3x greater. Relative to other coins, Tellor’s engagement is 10th-highest among previous reports.

Facebook:

There is no Facebook page for Tellor.

Discord:

The Tellor Discord group has 1,031 members.

The group is quite simplistic relative to other cryptocurrency Discord groups, with only 6 channels: Announcements, General, Developers, Mining, Tech-Talk and Dex Trading. Given the small group size, this is sufficient; moreover, there isn’t a great deal of activity within these channels.

Announcements has only one post this month, which is a link to a miner data dashboard; prior to this, there was no activity since January. General has a handful of messages over the past week but it isn’t particularly active, which is a little disappointing. There is some attempt at driving discussion around the project but there are few responses.

Telegram:

The Tellor Telegram group has 2,174 members.

I have summarised my findings from the group below:

  • The group is much more active than Discord – this is clearly the hub of discussion for Tellor. Over the past week, there has been daily conversation, though it is not constant.
  • Bidao is expected to be partnering with Tellor to utilise its decentralised oracle.
  • The community seem quite committed to the project, with suggestions provided for improvements, answers provided to new members’ questions swiftly and informatively and a general positive sentiment that is palpable.
  • Beyond this, however, there isn’t much to relay. We have covered the inflation adjustment already, which was a prominent topic of conversation.

BitcoinTalk:

There is no BitcoinTalk thread available for Tellor.

Let’s now take a look at Development:


Development:

For the following Development analysis, I will be evaluating project leadership, the website, the roadmap, the whitepaper, the wallets and finally providing a general overview:

Project Leadership:

There are 3 employees listed on the website (the CEO, CTO and CSO) and there are 4 employees listed on LinkedIn. According to Crunchbase, there are 1-10 employees, indicating a small team.

Regarding the leadership, the CEO is Brenda Loya, who has a decade of prior experience in the Bureau of Labor Statistics & US Dept. of Labor; the CTO is Nicholas Fett, the former Research Economist at the CFTC; and Michael Zemrose is the CSO, who was also the CSO for Daxia and has been coaching small business owners with Real Elevation for 7 years.

Beyond this, there is no other information publicly available on the Tellor team.

Website:

https://tellor.io/

The website is clean, modern in its design and well-branded, with the tagline “The decentralized oracle for DeFi” front and centre. The navigation menu is relatively comprehensive; it primarily contains links to further reading resources, such as the whitepaper, the security audit by CertiK, a helpful FAQ and Tellor 101 blog post and the Github repository, as well as the regularly updated Medium blog. There is also a Build With Tellor link that redirects to the technical documentation required for integration of the oracle.

Running through the homepage, the three primary features of Tellor are stated to be its simplicity, decentralisation and security, particularly regarding ease of implementation into smart contracts, trustless solutions and staked proof-of—work validation.

At present, we are told, smart contracts on Ethereum cannot access off-chain information directly, which is where the Tellor Oracle comes in, removing the requirement for centralised providers of off-chain data. Below this, we are given an overview of Tributes – the native token for the Oracle – which incentivises miners, secures the oracle and allows Dapps to request data via payment.

A timeline graphic is also provided with the history of the project, beginning in June 2018 with the conceptualisation of Tellor, through to its Consensys grant in October 2019, with the mainnet launch occurring in August 2019. At the bottom of the site, we learn that it is funded by Maker, Binance Labs and Consensys, plus social links are provided in the footer, though these should be more visible.

Roadmap:

There is no roadmap currently available for Tellor

Whitepaper:

https://tellor.io/storage/TellorWhitepaper.pdf

The whitepaper is a 16-page document, which is concise and informative.. It begins with an abstract and the concept of Tellor as a “decentralized oracle”, with the premise being that Ethereum smart contracts are self-contained and therefore cannot access off-chain data; Tellor utilises staked miners to create “trustless access to off-chain information”, with the data inputs being secured by the miner network.

Following this, there is a brief Introduction: Tellor allows for off-chain data to be requested by parties with miners competing to add the value to on-chain data banks. All of this data will be accessible by all smart contracts on Etheruem and the data inputs are secured by the miner network. Tellor’s smart contract seeks to be “the standard source of high value data for decentralized applications”. The Oracle itself has incentive mechanisms in the form of Tributes, which are the native token.

The document goes on to discuss the problems facing DeFi, primarily that there is a lack of a secure/decentralized price feed. Currently, the means by which a smart contract can access off-chain data includes manual inputs, which can be compromised, centralised parties, Proof-of-Authority consensus or Schelling Point systems – none except the latter are trustless and the latter is unnecessary for simple price data, with the potential for delays to consensus.

The subsequent section provides more detail on the Oracle itself, describing it as an on-chain data bank, where miners compete to add data points to the bank. The process is simple: Tellor mints Tributes; parties pay Tributes to request data; the Oracle selects the best funded query every ten minutes; the query collects data, making it available on-chain; the Tributes are rewarded to miners and used to secure the network with a staking requirement and data validation; and 5 submissions required for an official data point Proof-of-Work is used for Tributes but miners are also required to provide off-chain data points.

Following this, we find a more detailed section on the process of data acquisition: a user submits a query using Tributes for incentives; the query is tipped by other users who want the data too (to further incentivise it); every 10 minutes the oracle selects the best funded query and provides a new challenge for miners to solve; miners submit their Proof-of-Work solution and off-chain data to the oracle; the oracle sorts the data values and, once five values are received, the median value is selected as the official and saved on chain; miners are then allocated their payouts. Disputes on data points occur when someone owning Tributes pays a dispute fee within one day of mining – over the following week, Tribute holders vote on whether the data point was false or not; if false, the miner loses their stake; if true, the miner receives the dispute fee.

Moving onto Tellor Tributes, these incentivise miners to provide data and keep the oracle secure. Regarding supply, at 10 minutes per block, there are 144 queries on average per day, so supply is expected to grow at: base reward * 144, with the base reward being 27.5 TRB per block including dev share. (Note: this is no longer accurate, as we have established in earlier sections). Annual supply is expected to be at 2.5mn TRB in April 2021 assuming full utilisation (again, this is more likely to be 1.75mn TRB with the most recent update to the emission schedule). The 10% developer share is in existence to fund development by the team for the foreseeable future.

Towards the end of the whitepaper, we are given some potential applications of the technology, including exchange-rate data for trustless financial contracts, cross-chain information, static data and damage verification for insurance. Further, in the future, the team will be looking at zero-knowledge submissions, TLS Notary Proofs to provide assurances for queries and Automatic Reporting (off-chain analysis for detecting outliers).

The document concludes with three objectives of the system, including reducing risks with centralised oracles, building out a superior oracle system with a distributed set of participants from which data is derived and creating an incentivised system for this data that simultaneously disincentivises bad submissions.

Wallets:

As TRB is an ERC-20 token, it can be stored on a number of wallet options, including hardware wallets from Ledger and Trezor and web wallets, as well as offline solutions.

General:

*Update: April 20th 2020

Having recently come across this Medium post from earlier this month regarding potential future updates to the network, there are a few points I would like to highlight:

  • Increased data points per block + reduced difficulty target to improve scalability
  • Limited rewards per miner, no time limit on disputes and multiple round disputes to increase security
  • Removal of on-chain request data and token fee burning

And that concludes the Fundamental Analysis on Tellor. Let’s take a look at its price-history:


Technical

TRB/BTC

Tellor

As we can see from the Daily chart provided above, Tellor has only experienced one distinct market cycle, which began shortly after initial listing on exchanges in November 2019. This led to a multi-week rally from the first trading day that set the all-time low at 14,000 satoshis; a blow-off top culminated in the all-time high of 0.00114 BTC in mid-December 2019 – a high that remains untouched to this day.

Following this bull cycle, we can see that price sharply declined, falling for months until it formed a new base at 23,700 satoshis in January 2020. From here, it appears we have begun a new cycle but price failed to make new highs, instead putting in a lower high at 96,800 satoshis last month, from which point we have seen a move back below the Yearly Open at 57,200 satoshis. Price is currently range-bound between the Yearly Open as resistance and support at 44,000 satoshis. I am expecting a move above the range resistance to lead to further upside towards and beyond the 96,800-satoshi high of last month and potentially towards the all-time high. I will be a buyer once we break above that level and close above it on the Daily timeframe. Until then, I am sitting on my hands, as there is also a possibility that price moves towards the range support and it gives way (particularly when one considers current macro conditions); if this were to occur, I would be a buyer at 28,800 satoshis and lower.


Conclusion

This report is now over 4,000 words, and it is time to draw it to a close.

My final grading for Tellor is 7 out of 10.

Here, you can find my grading framework, for reference.

Lastly, here is a link to a Google Sheets file with any significant data from previous reports compiled for cross-comparative purposes. I will keep this updated as I continue to write these reports.

I hope this report has proved insightful and that you’ve enjoyed the read! Please do feel free to leave any questions in the Comments, and I’ll answer them as best I can.


 

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This Post Has 4 Comments

  1. Kumar

    Hi Nik, Just a curious question, the readings of the charts in the report were of past dates and this report was posted to me today. So is this newsletter intention is to provide a glance on how your metrics analysis looks like? or am I missing something? thanks!

    1. Nik

      Hey Kumar – the email was just a little delayed as I had some stuff to do elsewhere during the past week.

  2. Cyril

    Absolutely great read as always, thanks Nik!

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