Watchdog Problem

We know that oracles need to implement some measures to verify the data. One such measure is to hire watchdogs that check data and filter out wrong values. If a reporter is found to submit wrong values, he gets punished, and the watchdog receives a reward.

The problem here is that if watchdogs at guard filter out any wrong data, reporters won’t cheat as they risk getting punished. While this is good for the users, it is an issue for the watchdogs. They don’t get paid anymore as they don’t find any misbehaving reporters.

In the end, it could be a profitable strategy for the watchdogs to allow a certain number of wrong data reports. But it reduces the value of the service for the users who rely on the correctness of the data.