Here at Delphi Systems, we’re building distributed oracle technologies.

But rather than trying to build an oracle consensus network (like what Augur is doing) we have decided to focus on providing an oracle development framework and marketplace. So anyone will be able to offer their services as an oracle with Delphi, and our tools are designed to help them do so (and to help users connect with them once they do).

There’s a problem here, though. If anyone can deploy or participate as an oracle, how can users tell which oracles are honest and reliable, and which ones are not? In other words, how can you tell the good from the bad?

That’s where our compound token, PHI, comes in.

Dishonest people (or oracles) are certainly willing to say that they are honest, so we cannot just “take their word for it” and expect good things to come of it. The only way to be confident that someone is honest is if they have a track record of honesty; if they have consistently told the truth (even when serious money is on the line) for a long time, and you are able to look over their history to verify this, it would make a lot more sense to assume that they will continue to be honest, and to accept a degree of trust in them as an oracle.

So the real issue, then, is: how can we best generate oracle track records and reputation metrics? Letting a central agency control this data wouldn’t make sense (it would just give them the power rather than the oracles), so instead, we have to allow users to signal their support (or disapproval) for oracles’ reputations. There is one last problem, though: if it is completely costless for users to signal about oracles, then the system can be abused. The oracles themselves could Sybil-attack the network to try to make it seem like users are signaling in favor of them when really, they’re not.

The way we solve this is with PHI, a token for signaling and oracle reputation data. Not only is this one of the most sophisticated token constructs seen on Ethereum, combining the advantages of multiple different token architectures into one compound structure, but it serves as the foundation for a data platform that will allow users to communicate their oracle preferences (and experiences) with the rest of the network and world. There are all sorts of amazing things that PHI is capable of (most of them the results of the MiniMe token architecture that it is built on), but what we are especially concerned with at Delphi is the potential when it comes to generating reputation data; the best part is, users won’t even need to spend their PHI to signal how they want to!

By spreading the signaling power throughout the community (via distributing the tokens themselves), we set the stage for a truly valuable oracle marketplace to develop. As signal data is being generated to rate and rank oracles in this marketplace, we will be providing the software and tools to fluidly work with this data and organize it in ways that make sense to users who just want to find and link up with the most affordable, reliable, and honest oracles out there.