FIP.11 and SIP.05 seek to refine how Flare’s rewards for the core protocols are distributed among the network’s data providers.
As Flare continues to evolve, it’s essential for the rewarding logic of Flare’s enshrined oracles to dynamically reflect the ever-changing needs of the network. FIP.11 and SIP.05 aim to:
- Ensure participation in the network protocols is sustainable for all honestly behaving data providers.
- Establish a fairer reward structure that compensates a broader set of data providers.
- Align protocol functionality with network developments and changing market conditions.
Voting
FIP.11: https://proposals.flare.network/FIP/FIP_11.html#21-proposed-changes
- Notice period: November 14 – November 17, 2024
- Voting period: November 18 – November 24, 2024
SIP.05: https://proposals.flare.network/SIP/SIP_5.html
- Notice period: November 14 – November 20, 2024
- Voting period: November 21 – November 27, 2024
What are the proposed changes?
Adaptive PCT bands
Currently, the primary (IQR) and secondary (PCT) rewards bands determine how data provider rewards are distributed within the FTSO (Flare Time Series Oracle) based on the historical accuracy of individual price submissions. The size of the PCT bands are currently fixed for each FTSO feed, per FIP.03.
FIP.11 and SIP.05 propose an adaptive method for setting the width of PCT bands to make rewards bands better reflect market behavior. The proposals also introduce an improved method of calculating rewards bands, basing it on asset volatility rather than solely examining price submissions.
Increased reward allocation adjustments for PCT bands
The current IQR/PCT inflation ratio is set to 70/30, as per FIP.03. However, data suggests that this ratio overemphasizes precise proximity to the median value. This overemphasis can overlook valuable submissions with data that, while marginally less precise, provides equally valuable insights that support the functionality of the FTSO. This has led to certain data providers disproportionately benefiting more than others, which this proposal seeks to fix.
To account for this, FIP.11 and SIP.05 would recognize the contributions of providers with valuable submissions through increasing the reward allocation for the PCT band to an initial IQR/PCT ratio of 40/60. Additionally, further increases to the PCT band allocation will be considered post-evaluation through future votes. Note that adjusted PCT bands do not influence FTSO accuracy, and only serve to uphold Flare’s high decentralization standards by more fairly recognizing contributions of all its providers.
Other potential changes
Additional changes in protocol parameters needed to further optimize performance may be proposed in the future, which would be voted on directly by the data providers within the Management Group. Some possible adjustments in the future may include:
- Block-Latency Feeds: Refine reward width intervals to incentivize price accuracy.
- Reward Splits: Revise the anchor and block-latency split from 70/30 toward a target of 50/50 if needed.
- Weight Systems: Lower overdelegation caps to encourage decentralization.
- Unearned Rewards: Redirect pools of unclaimed rewards to fund data provider grants.
For a full list of potential future changes, please refer to the proposals:
FIP.11: https://proposals.flare.network/FIP/FIP_11.html
SIP.05: https://proposals.flare.network/SIP/SIP_5.html
How will FIP.11 and SIP.05 benefit the Flare community?
If passed, FIP.11 and SIP.05 will promote a fairer and more adaptive rewards structure for data providers. This will ensure that a wider range of data providers are recognized, and in turn, strengthen decentralization and promote honest participation. Ultimately, this will further enhance FTSO accuracy.
If this proposal passes, implementation of the new parameters will begin soon after voting ends. Be sure to vote on time at the Flare Portal for FIP.11 and SIP.05. Here’s a guide on how to vote.
FIP.11 Voting period: November 18 – November 24, 2024
SIP.05 Voting period: November 21 – November 27, 2024