Inside Firelight’s Marketplace: Economically Secured Services (ESS) and Operators

The feature-complete Phase 2 of Firelight operates like a marketplace. On the demand side, Economically Secured Services (ESS) lease security for high-impact DeFi use cases, creating a market for on-demand economic guarantees. On the supply side, stakers deploy assets in exchange for fees and Firelight Points, while operators manage the technical infrastructure that secures ESSes. These 3 core participants; ESSes, stakers, and, operators form the basis of the architecture of Firelight — and the result is a flexible and efficient way to lease economic security.

This article will specifically discuss the economic incentives that drive the relationship between operators and ESSes.

What are Economically Secured Services?

ESSes lease economic security for their high-impact DeFi use cases and create a market for on-demand economic guarantees, where slashable collateral, underwrites transactions.

The potential applications for ESSes span across DeFi’s most critical infrastructure. Price feeds can offer economic guarantees around data accuracy, oracle networks can provide slashable commitments for data delivery, integrity, and on-chain insurance protocols can back their coverage with economic security, just a few examples of the types of security that ESSes are able to lease.

What are Operators on Firelight?

Operators, on the other hand, manage the technical infrastructure that secures ESS, as well as relay information between vaults and ESSes.

Operators handle complex computational tasks, including reporting correct price and data feeds, and performing and validating computations, such as proofs. These tasks directly impact ESS functionality, and operators that don’t perform these tasks correctly are at risk of being slashed, since their actions may compromise the economic guarantees that back these services.

In addition to performing these tasks, operators manage information flows between vaults and ESSes. The focus of these specific tasks is on accuracy rather than operator performance. For example, if an insurance ESS needs to enforce a slash on a vault to pay claims following an exploit, the operator will need to accurately relay this information to the vault ensuring that the slash and redistribution of funds to the ESS happens accurately.

If an operator is unable to perform their tasks, they risk being slashed or ejected from the operator set. They must ensure consistent uptime, prompt security patches, and scaling resources to meet the demands of the network. As their actions directly impact the security and efficiency of supported ESSes, performance standards are non-negotiable.

Blockchain-based safeguards to enforce operators maintain standards include, denial of service (DDoS) protections, secure cryptographic key management, and robust incident response procedures.

Selection Process for Operators

The choice of operators emerges from a three-way accord between vaults, operators, and ESSes, creating a market-driven selection mechanism where all parties have agency in the relationship. Vaults choose the operators they want to utilize to connect to ESSes, while ESSes select the operators that best meet their requirements. Similarly, operators have the freedom to choose which vaults and ESSes to work with, ensuring alignment on both sides of each partnership.

This mutual selection process includes built-in flexibility, as any of the three parties can decide to opt out of the agreement at any time. This creates natural market pressures that encourage high performance and compatibility across all relationships.

When making their selections, both vaults and ESSes prioritize operators who demonstrate technical competence and proven track records. Operators meanwhile, must show their infrastructure capabilities through previous experience running validators or similar systems, providing concrete evidence of their ability to maintain the technical standards required for secure operations.

Geographic distribution also plays a crucial role in operator selection, as vaults and ESSes aim to work with operators spread across different regions. This geographic diversity improves overall network resilience and helps prevent downtime caused by localized network failures, ensuring more robust service delivery for all participants.

Benefit of this Model for ESSes

ESSes can quickly bootstrap security without needing to build their own validator networks from scratch, allowing them to focus on their core protocol development while leveraging existing infrastructure. The model enables them to dynamically scale security based on real-time needs and market conditions, creating the flexibility to adjust economic guarantees as their protocols grow or as market demands shift.

The pay-for-performance structure ensures ESSes only pay for the security they actually need, making economic guarantees cost-efficient. Additionally, the marketplace facilitates flexible slashing designs that can be tailored to each ESS’s specific operational requirements while maintaining security standards.

Benefits of this Model for Operators

Operators earn a percentage of ESS fees as compensation, creating a direct revenue stream tied to the services they support. This model is particularly advantageous for operators already performing validation tasks for network security, such as Flare Network’s validator set, and other validators that can integrate Firelight to create an additional revenue stream from their existing infrastructure.

The architecture allows operators to monetize their infrastructure across multiple ESS commitments simultaneously. They also maintain flexibility in choosing which vaults and ESSes they want to operate with.

Firelight’s marketplace for on-demand guarantees, and yield provisioning, is a fundamental shift in the architecture of restaking protocols.

By creating a flexible and economically beneficial system for both ESSes and operators, we’re pioneering a market for on-demand guarantees. We’ll unveil further technical details about both operators and ESSes closer to Phase 2 (feature-complete launch) of the protocol.