Commonly known in the blockchain space as Oracles, Signal Providers provide off-chain data onto the blockchain. While smart contracts themselves were a huge leap for crypto, it had one major limitation, getting data from the outside world. Smart contracts cannot natively contact the outside world, they need an entity to exist off-chain to provide data on-chain in a manner that is trusted. This is the function of a Signal Provider to the Flare Network.
As stated above, a Signal Provider’s main function is to provide data to the Flare Time Series Oracle (FTSO). Currently, Signal Providers on the Flare Network are tasked with providing reliable, accurate pricing data for tokens that are supported on the Network. This data in turn gets used by applications on the network. In the future more asset prices and potentially different types of data, such as commodity prices or weather, will be made available.
Network applications will be the main consumers of off-chain data. One of the first categories of network applications on the Flare Network is DeFi. Pricing data from Signal Providers will be needed in order for a user to do things like trade tokens, or participate in liquidity pools.