STP.02: The secondary FTSO reward band is live on Songbird

The introduction of a secondary reward band is designed to support increased decentralization of the Flare Time Series Oracle (FTSO).

The original system only rewarded data submissions that were as close as possible to the vote-power-weighted median price. This resulted in extremely tight reward bands where only about 25% of submissions are typically rewarded. The low number of providers that have access to the rewards put the rest at risk of not being able to cover their infrastructure costs, which in turn poses a centralization risk to the network.

The second, wider reward band therefore aims to increase the number of data providers receiving sufficient rewards to cover their infrastructure costs. There is still a strong incentive for reliability and accuracy, as submissions must be close enough to the median to be included. 

The secondary reward band will receive 30% of all FTSO rewards, and the primary reward band will receive 70%. Both reward bands are independent, so if a submission falls within both bands, it receives both rewards. For full detail on the Songbird Test Proposal 2, please see the Governance Proposal Repository.

The effect of the new secondary band is clearly visible when looking at the Songbird FTSO Monitor. Data providers that are only in the primary band (IQR) 30% of the time can still potentially receive the secondary rewards (PCT) 80% of the time. In the graph below the very narrow blue band shows the primary reward band and the wider red shows the secondary.