Songbird Test Proposal 02: Add a secondary band to FTSO reward calculation

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

The FTSO utilizes the network structure to deliver highly decentralized prices and data series to dapps on Flare, without relying on centralized providers. The FTSO is supported by almost 100 independent data providers incentivized to provide reliable data every 3 minutes.

The current system rewards data submissions that are as close as possible to the vote-power-weighted median price, resulting in extremely tight reward bands where only about 25% of the 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.

This proposal adds a second, wider reward band aiming at increasing the number of data providers that can be rewarded, while retaining a higher rewards allocation to submissions closer to the median value.

This is intended to enable more data providers to cover their infrastructure costs with their rewards. STP.02 aims to encourage increased network decentralization by reducing the barrier to entry for new data providers while still maintaining a strong incentive for reliability and accuracy.

Read the full details of the proposal on the Governance Proposal Repository. Wrap your SGB before Saturday 4 February to participate in the vote. Voting will commence several days later on the Flare Portal.

If approved, the change will first be tested on Coston before implementation on Songbird. Once tested on Songbird, a separate Flare Improvement Proposal may also be created to enable the same change to the FTSO reward bands on Flare.