Benchmark Protocol Integrates Chainlink Oracles to Decentralize the Rebase Function

Dan Fisher
May 20 · 4 min read

“When we were looking at important features such as data integrity, security, and reliability, Chainlink was by far the best of breed solution for our data needs.”

-David Mass, Founder

Welcome to the New Benchmark

Today, Benchmark Protocol announces our mainnet integration of Chainlink, the market-leading decentralized oracle network. Benchmark will leverage Chainlink oracle data feeds to derive the inputs for rebasing, utilizing the iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX). VXX is an Exchange Traded Note (ETN) that tracks the VIX short-term futures, which is a measure of expected stock market volatility based on S&P 500 index options.

Introducing Benchmark Protocol: Benchmark Protocol’s native token (MARK) is a supply-elastic, collateral utility token, built on the Ethereum network, that is both rules-based and non-dilutive. Being a supply-elastic collateral allows supply adjustments, or rebases, to change the total supply across the network. This means that the number of MARK tokens a holder owns may increase or decrease on a daily basis without impacting that user’s ownership of the total network.

Powered by Chainlink’s decentralized oracle solution, Benchmark Protocol’s proprietary rebase algorithm now features a dual-input model that includes adjustments based on (1) Price relative to the SDR rate and (2) Volatility (Stock Market Fear Index) as denoted by S&P 500 futures contracts (VXX). The SDR is an international reserve asset reflecting a weighted value of five leading fiat currencies — the U.S. dollar, the euro, the Chinese RMB, the Japanese yen, and the British pound sterling. By incorporating the VXX, the Protocol is designed to withstand periods of high volatility in crypto and traditional capital markets.

The algorithm calculates deviations between the trading price of MARK and the SDR rate to determine if a rebase of the total supply should occur. If there is a deviation in price, Benchmark’s smart contract applies a supply adjustment (leveraging VXX data) to determine the magnitude of the change in the total MARK supply to each token holder’s wallet. The composition of the algorithm creates a unique, adaptive supply mechanism to optimize value and stability.

After comparing Chainlink to other oracle providers, we concluded that Chainlink’s platform and reach gave us access to optimal features needed to secure the Benchmark rebasing mechanism, including:

  • Premium API Capabilities — Chainlink Oracles have native credential management capabilities needed to access paid, password-protected APIs, allowing Benchmark to rely on premium data providers for key datasets like the CBOE VIX and SDR.
  • Decentralized Infrastructure — Chainlink decentralizes the sourcing and delivery of data to our smart contracts, making use of decentralized computation as a means of increasing data availability and protecting against potential data manipulation attacks.
  • Secure Network Operators — Chainlink Oracles are run by numerous independent and experienced blockchain and security DevOps, protecting us against Sybil attacks.
  • Proven and Transparent Oracle Networks — Chainlink has proven to secure tens of billions of dollars in assets on mainnet for leading DeFi projects, with supporting visualizations that allow users to monitor the performance of oracle networks and individual nodes in real-time.

Changes to Proprietary Rebase Algorithm

  • Benchmark Protocol will now utilize a new indicator to track volatility and calculate supply adjustments by leveraging the VXX.
  • When MARK TWAP is below the PEG, we will now apply a dynamic smoothing period ranging from 3 days to 1.5 days. When the TWAP is just below the PEG, we will utilize a 3 day smoothing period. When the price is 50% of the PEG, we will utilize a 1.5 day smoothing period. The smoothing period will linearly decrease from 3 to 1.5 days between these intervals. Any price less than 50% of the PEG will also utilize a 1.5 day period.
  • An updated Daily Rebasement window to coincide from 8 AM EST to 5 PM EST to coincide with NYSE trading hours + an extra buffer to reduce trader arbitrage

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, visit chain.link, read the Chainlink 2.0 whitepaper, subscribe to the Chainlink newsletter, and follow @chainlink on Twitter.

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About Benchmark Protocol

Benchmark Protocol mitigates liquidation events and hedges risk with the MARK token; a supply elastic, stablecoin-alternative that connects traditional capital markets to DeFi. The protocol operates as a rules-based utility that dynamically adjusts supply based on the CBOE volatility index (VIX) and deviations from the target metric — equal to 1 Special Drawing Rights (SDR) unit. Employing the SDR creates a larger use case rather than exposure to just one currency; the application of this creates a larger user base and delineated exposure to markets around the world. The DeFi space needs a collateral utility that retains its efficacy and increases inherent, baseline liquidity during periods of high volatility.

Benchmark is built on the Ethereum blockchain. The MARK token is the native asset in the Benchmark network and provides only the utility value available to it through the Benchmark network.

BenchmarkProtocol

Benchmark Protocol is a Supply Elastic Collateral and Hedging Device, Driven by the Volatility Index

BenchmarkProtocol

The Benchmark Protocol is an Uncorrelated, Liquid, VIX-denominated Collateral Utility. The protocol is a rules-based, supply-elastic collateral utility that adjusts supply based on volatility indexes (VIX) and deviations from the target metric — equal to 1 Special Drawing Rights

Dan Fisher

Written by

CMO @Benchmark_DeFi

BenchmarkProtocol

The Benchmark Protocol is an Uncorrelated, Liquid, VIX-denominated Collateral Utility. The protocol is a rules-based, supply-elastic collateral utility that adjusts supply based on volatility indexes (VIX) and deviations from the target metric — equal to 1 Special Drawing Rights