B.Protocol Integrates Chainlink Keepers on Ethereum Testnet to Further Secure Liquidations Within B.AMM

B.Protocol is excited to announce our successful integration of Chainlink Keepers on Ethereum’s Kovan testnet to help liquidate loans within our Backstop Automated Market Maker (B.AMM). The use of the keepers is two-fold:

1. Whenever the B.AMM prices deviates significantly from current market price, due to large inventory imbalance, the keepers will automatically trigger an arbitrage transaction with DEX aggregator. The arbitrage will decrease the imbalance, and will allow the B.AMM to offer prices that are closer to the market price.
2. In lending platforms where a dedicated liquidation transaction is needed, Chainlink Keepers automatically step in and trigger liquidation functions, adding more robustness to our liquidation mechanism.

B.Protocol decided to use Chainlink Keepers because it’s a decentralized service made up of the same professional DevOps that currently secure billions of dollars in value via Chainlink Price Feeds. Chainlink’s architecture is also specifically optimized for low costs and high reliability, as evidenced by its historical uptime during market volatility and high gas prices.

B.AMM is designed to improve the lending platform liquidation process, and allow them better capital efficiency, by incentivizing liquidity providers — instead of bots and miners — to liquidate undercollateralized loans within decentralized lending markets. For a detailed analysis of B.AMM’s design, view our previous Medium blog post or view the B.AMM whitepaper.

Once a liquidation occurs, a rebalance process converts the seized collateral back to the original asset by offering the asset for sale at market price, with a discount which depends on the inventory imbalance, according to a special price formula. One potential edge case in the B.AMM system is that despite a significant discount, takers will not buy the offered inventory, as most of the time there is no inventory for sale.

Another potential edge case in the B.AMM system is that liquidity providers might be slow to liquidate loans during extreme conditions. Thus, we wanted to implement a secondary liquidation mechanism to ensure they are liquidated in a timely manner.

Chainlink Keepers provide the two services by using verifiable off-chain computation to routinely check for DEX arbitrages and open loans for under-collateralization. If B.AMM’s price is arbitragable or liquidity providers fail to liquidate loans on time, Chainlink Keepers will trigger the arbitrage or the liquidation immediately after.

“Chainlink Keepers protects the liquidity providers by executing potential arbitrages between the B.AMM and DEXes, and ensure that liquidations within B.AMM remain in sync with external market conditions, helping keep lenders fully solvent,” stated Yaron Velner, Founder and Lead Developer of B.Protocol. “By leveraging Chainlink Keepers are a reliable supporting liquidation mechanism, liquidity providers able to maintain economic incentives to operate as they do today yet still provide users with additional guarantees on performance.”

About Chainlink

Chainlink is the industry standard oracle network for powering hybrid smart contracts. Chainlink Decentralized Oracle Networks provide developers with the largest collection of high-quality data sources and secure off-chain computations to expand the capabilities of smart contracts on any blockchain. Managed by a global, decentralized community, Chainlink currently secures billions of dollars in value for smart contracts across decentralized finance (DeFi), insurance, gaming, and other major industries.

Chainlink is trusted by hundreds of organizations, from global enterprises to projects at the forefront of the blockchain economy, to deliver definitive truth via secure, reliable oracle networks. To learn more about Chainlink, visit chain.link and subscribe to the Chainlink newsletter. To understand the full vision of the Chainlink Network, read the Chainlink 2.0 whitepaper. Want to discuss an integration? Talk to an expert.

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About B.Protocol

B.Protocol is a Backstop Liquidity protocol, handling liquidations in scale for DeFi lending platforms. By creating a transparent, committed, smart contract-based liquidation system, B.Protocol enables better capital efficiency for DeFi users, while creating another layer of stability for the lending platforms themselves. As liquidations are the main growth engine for DeFi, The B.Protocol backstop solution is unleashing its growth potential.

B.Protocol is live on mainnet since Oct. 2020, is fully decentralized, and controlled by the BPRO token holders.

To learn more, please visit our Website, Twitter, Discord, Medium, Forum, Reddit, and GitHub.