A Deeper Look: Zap Protocol and Tellor

In the oracle space, it is not just a ‘versus’ type of game, but also a ‘rising tide lifts all boats’ type of game. We are early in the era of oracles powering decentralized applications, and the perfect solution arguably doesn’t exist yet. We can learn from each other and grow stronger together.

Proof-of-Work Oracle

Tellor is the result of a weekend hackathon project at Angelhack DC in July of 2018, where it originated as a ‘ Mineable Oracle Contract’. It uses the Bitcoin-pioneered mining process, except to have miners compete to deliver data and reward them with minted tokens. This was later dubbed the ‘Proof-of-Work Oracle’. Tellor launched in August 2019.

Bonding Curve Curation Market

Zap Protocol development started in 2017 and was originally launched as the first decentralized oracle platform on January 1st 2019. It also pioneered the use of ‘Bonding Curves’, which later evolved to expand the oracle platforms’ capabilities with tokenization and more, dubbed a ‘Bonding Curve Curation Market’.

As we can already tell, there are quite a bit of differences between the two oracle protocols. Below, we take a quick look at some of the biggest contrasts:

1) Consensus mechanisms

As we covered earlier, Tellor utilizes Proof-of-Work and so leverages competing miners to deliver data. As we’ve learned from Bitcoin, mining is not only wasteful, it also leads to centralizing mining power into the hands of those who enjoy the cheapest electricity and have the deepest pockets. This could in turn potentially cause oracle centralization.

Zap Protocol doesn’t enforce any consensus mechanism; Anyone is free to select the oracles they like and no one can force you to trust anyone. Reputation is based on a community curation model, where oracles with the longest runtime and most value staked to them are most likely to be reliable and valuable. But there is always the freedom of choice.

2) Available data types

For now, Tellor is aimed specifically towards DeFi applications. This means Tellor will solely provide price feeds. As DeFi is still in its infancy and the supermajority of capital is still locked in traditional businesses and markets, this leaves a relatively small target market.

Zap is set up so that anyone or any entity is able to oraclize data, from regular individuals to large corporations. Back in 2018, Zap already claimed they had a host of vendors from shipping to quant trading companies ready to offer data, which they will deploy when usecases start to become tangible. This exposes Zap to a larger target market.

3) Tokenization

Tellor is limited to providing price feeds for DeFi. Aside from Zaps’ wider range of datasets and wider range of resulting usecases, Zap is also an ERC20 token factory, like Ethereum. Except Zap ERC20 tokens are liquid, also called ‘tokens 2.0’. Combining oracles with bonding curve- and tokenization capabilities expand the prococols’ usecases beyond data into stablecoin, DAO or fundraising territory, for exampe.

Please note: This is an opinion piece by community members. Thank you for reading!




Crypto projects & topics of interest in a non-technical way. Author Twitter: @dave_jonez_02 & @3mperat0r.

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Dave Jones

Dave Jones

Crypto projects & topics of interest in a non-technical way. Author Twitter: @dave_jonez_02 & @3mperat0r.

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