Chainlink is a crypto oracle network introduced in 2017 to provide oracle solutions to the crypto and Defi world. Oracles are tools designed to provide data feeds from the non-blockchain world(off-chain) to the blockchain and smart contract world(on-chain).
Although there are multiple platforms offering oracle services, the most popular one is Chainlink. Among the reasons crypto and Defi projects prefer Chainlink include quality data, complete decentralization, security, and a good reputation. This guide will look into how some Defi projects leverage this network to provide services.
Aave is one of the top Defi platforms to interact with Chainlink in service provision. By definition, Aave is a Defi borrowing and lending platform. There is a need to get price feeds on the prevailing rates in the market or other parallel blockchains. Aave is an Ethereum based platform that can only easily access data that is on the Ethereum blockchain.
Aave partnered with Chainlink, where it can benefit from the oracle capabilities provided by the network. In addition, the platform gets Chainlink price feeds, which have been collected from different blockchains and exchanges.
Therefore, Aave became the first lending platform to start leveraging off-chain data to predict lending rates. As a result, borrowers and lenders in the network benefit from the market standardized lending and borrowing rates, which are possible because of the oracle network.
Defi Yield Protocol
Defi yield protocol is an Ethereum based Defi platform designed to provide users with ample income-earning opportunities. DYP is the pioneer platform that allows users to provide liquidity and earn rewards in BNB and ETH. Since its launch in 2020, DYP has made excellent steps towards the achievements of a reliable network since its launch.
A significant step by DYP is the partnership with the Chainlink network. Primarily, all the services offered by DYP rely on quality data and information. However, since DYP is only currently connected to ETH and BNB, it lacks access to a world of other chains and off-chain data from markets.
DYP's interaction with Chainlink will help in providing excellent price feeds for ETH-USD and BNB-USD pairs. According to their medium page, DYP will, in the future, ensure that all the staking and farming vaults have access to the Chainlink price feed solutions. The decision to use Chainlink is because of the platform's reliable oracle solutions and infrastructure designed for security.
Synthetix is another Defi platform connected to Chainlink. The Synthetix network is a platform designed to bring crypto and some non-crypto assets to the blockchain world. Among the non-blockchain assets include stocks, which once introduced, are changed into blockchain transferable assets called synths.
Synthetix partnered with Chainlink to benefit from the data collected by Chainlinks oracle. For instance, Synthetic as a blockchain network is not fully capable of accessing market data on shares and other assets in the financial markets. Therefore, the platform needed to chainlinks price feeds on the latest in the financial markets.
The Synthetix exchange platform benefits from the partnership since the exchange of Synths is based on real-time data feeds. Furthermore, by integrating with Chainlink, Synthetix provides further decentralization of its services.
Another Defi platform that has vastly benefited from its integration with Chainlink is the bZx protocol. It has two products, namely Torque and Fulcrum. Torque allows users to borrow assets but with policies like fixed interest rates and indefinite term loans. Fulcrum is a lending and margin trading tool.
A platform requires a reliable data source to provide services more efficiently. Therefore, bZx integrated with Chainlink to benefit from the platform's oracle capabilities by accessing tamper-proof data or high quality.
Chainlink helps the bZx network with price feeds that are invulnerable to API failures. Even more, bZx launched a tool called polygon in a mission to expand the vastness of Chainlink price feeds.
Ampleforth is another Defi network that leverages Chainlink and its oracles to ensure it provides highly efficient services. In addition, this network offers an elastic supply for a digital asset, thus reducing price volatility by creating supply volatility.
Ampleforth's currency, AMPL, benefits highly from the set policies since it maintains long-term price stability. AMPL supply increases when the prices go up and are reduced when the prices lower; thus, AMPL will be a stable asset in the long run.
The integration of Chainlink oracles has vastly helped the Ampleforth network decentralize its services, offering them efficiency. By collecting data using the oracle data feeds, Ampleforth will quickly reduce the number of tokens held by each user and protect the average price.
Chainlink is currently one of the most trusted oracle networks, providing services for many platforms in the Defi world. There are lending platforms like Aave and bZx, which leverage oracles to collect the best lending rates in the markets.
Synthetix network leverages the chainlink oracles to collect data about synthetic assets in the platform. Ampleforth uses the oracles to collect price feeds that maintain the AMPL and remain decentralized.
Since DYP just recently interacted with Chainlink, the users will enjoy getting efficient services in the network. DYP plans to in future ensure all pools and vaults enjoy the Chainlink oracle reach. Chainlink also works with several other Defi platforms for efficiency purposes.