Welcome back to our series of biweekly updates on Chainlink!
Chainlink is one of the oldest and best-known decentralized oracle networks and the only oracle network that’s been battle-tested in production by a large number of projects that rely on its oracles for off-chain data.
Chainlink VRF (Verifiable Randomness Function) is the first randomness product offering robust security guarantees for smart contract developers and users. Chainlink VRF employs the Chainlink network to generate randomness with an input seed, and then publishes both the result of the calculation and a proof that the randomness was generated with the supplied seed on-chain.
In the last two weeks Chainlink has collaborated with a number of successful projects.
Firstly, Digitex Futures is integrating Chainlink to bring security and transparency to price determination. Chainlink’s Price Reference model provides Digitex with three important features: accurate prices, manipulation resistance, and liveness guarantees. Digitex plans to start using Chainlink’s Price Reference Contracts to support trading of their initial market of BTC/USD Perpetual Contracts, and add additional price feeds as they launch more products.
Secondly, BlockPegnio, a blockchain-focused innovation project for the video gaming industry, announced the implementation of Chainlink’s VRF for the creation and upgrading of in-game tokenized blockchain assets. Chainlink VRF provides players with assurances that the outcome of critical interactions, such as the crafting and enchanting of in-game items, is fair and verifiably random.
In addition, Vite Labs are planning to integrate with Chainlink. Vite is the world’s first DAG-based smart contract platform, well suited for commercial dApps with performance rivaling their centralized counterparts. Their initial planned focus will be on augmenting the value of ViteX and VitePlus.
DMM uses Chainlink oracles to maintain a fully collateralized, transparent, and trust minimized money market. They have worked with Chainlink, to create a solution that enables DMM smart contracts to calculate the valuation and active collateralization ratio of the entire DMM Ecosystem. This ensures that mTokens are sufficiently overcollateralized before anyone, including the DMM Foundation, is able to mint and issue more mTokens.
Last but not least, Kava is onboarding Chainlink’s reference price oracles onto the Kava blockchain, making them available to the entire Cosmos ecosystem. Any Cosmos Hub will be able to query the Kava blockchain to obtain a variety of high-quality DeFi data powered by Chainlink’s decentralized oracle network. Through a native integration of Chainlink oracles, Kava becomes the one-stop-shop for Cosmos chains that need DeFi services or data to augment the value of their own financial applications. What’s more, the overlap of Chainlink node operators and Kava validator nodes increases security and alignment.
Read on for more details!
Development
Github metrics:
Developer activity (from Coinlib.io):
The Pivotal Tracker is how you can track development progress. (Guide to understanding Pivotal Tracker)
The Chainlink team doesn’t give timelines/estimates for development targets.
A great community made overview of the project is here
This article is a good overview of staking.
Take a look at this FAQ.
Chainlink White Paper.
For a deep dive check out this repo.
Chainlink can be stored anywhere ERC20’s can, even though it isn’t one. It doesn’t have its own blockchain and never will, so you don’t need to worry about a token swap.
Chainlink is actively securing value on a number of DeFi platforms via their Price Reference Data Feeds. This blogpost provides a bit more context.
Set Up a Chainlink Node
Chainlink VRF: On-chain Verifiable Randomness
Chainlink VRF is a first-of-its-kind randomness product offering robust security guarantees for smart contract developers and users. Chainlink VRF employs the Chainlink network to generate randomness with an input seed, and then publishes both the result of the calculation and a proof that the randomness was generated with the supplied seed on-chain. It is built specifically for blockchain-based games to add tamper-proof randomness to smart contracts. Chainlink VRF ensures that external attackers, miners, and even our own development team cannot control the RNG (Random Number Generation)
Developers can easily integrate Chainlink VRF to utilize verifiable randomness in their smart contracts through Chainlink’s recently released developer documentation.
Chainlink Oracle Reputation
Chainlink Oracle Reputation (‘COR’) illuminates historical and real-time performance of Chainlink oracles on the Ethereum network.
COR provides data insights and visualisation tools that are designed to enable Chainlink oracles to analyze and improve their performance. COR’s engine allows Ethereum users and builders to evaluate and reach consensus on oracle reliability quickly and efficiently.
Social encounters
DeFi Panel: How Blockchain Oracles Will Skyrocket DeFi’s Growth
Watch the video to learn what makes a secure DeFi oracle mechanism reliable enough to be trusted by the already live smart contracts that are successfully securing hundreds of millions of dollars.
Sergey Nazarov: The Importance and Evolution of Oracles and On-chain Verifiable Randomness
Presentation at Consensus: Distributed
In this talk, Sergey will cover how oracles have already accelerated the growth of DeFi, decentralized insurance, and many other smart contracts, and why they play such a critical role in the continued evolution of smart contracts beyond tokenization. He’ll also examine the key considerations that users need to take on when choosing a blockchain oracle mechanism, as well as examining key new developments such as the use of On-Chain Verifiable Randomness (VRF) in blockchain gaming. There is also a Q&A by Bobby Ong of CoinGecko.
Upcoming events
All the upcoming events can be found on Chainlink’s Community events page
30 May
#Chainlink Developer Office Hours
30 May
Virtual AMA with Sky Guo, Founder of Cypherum
02 June
Sergey Nazarov at Messari Crypto’s Mainnet 2020
04 June
Chainlink Amsterdam Virtual Meetup
04 June
Virtual AMA with Charlie Smith of Reserve Protocol
10 June
Aave and Chainlink Developer Meetup
Are you interested in hosting your own meetup? Apply to become a Chainlink Community Advocate today: https://events.chain.link/advocate
Finance
Token holders and the number of transactions (information from Etherscan.io):
Check out the New Price Reference Feeds Page.
Chainlink Price Reference Data for DeFi
Roadmap
The team does not publish a roadmap but you can follow progress on Pivotal Tracker and Github.
Partnerships and team members
Chainlink’s Partners, Clients, and Integrations
The Force Protocol Integrates Chainlink to Power DeFi
The integration between The Force Protocol and Chainlink has been successfully completed. The Force Protocol will use the Chainlink oracle network to calculate the value of collateral assets to create bonds, calculate the collateralization ratios, trigger conditions for supplementary collateral, and trigger conditions for collateral liquidations, among other uses. Moreover, The Force Protocol will become a member of the Chainlink ecosystem.
Chainlink provides price feed oracles in a decentralized manner, ensuring a secure and stable data source of token asset values to power the DeFi application.
The Force Protocol is a development and operation team of a recently-released Ethereum DeFi application. In our app, the price of tokens needs to be frequently called to calculate the value of assets. The core of their DeFi application is built on the value of underlying assets. If there is a security problem with the asset prices, such as an incorrect or manipulated price, it will directly affect the security of the DeFi application and potentially even destroy the security foundation of the application entirely. Therefore, a secure and stable decentralized oracle system is of great importance to us.
Digitex Futures is Integrating Chainlink to Bring Security and Transparency to Price Determination
Chainlink’s Price Reference model provides Digitex with three important features: accurate prices, manipulation resistance, and liveness guarantees. Its decentralized design ensures that a malicious or incompetent actor cannot hinder the quality of the price data or the reliability of the price update. Additionally, the use of high-quality market data and secure node operators enforces high standards on each individual component of the network. Chainlink’s infrastructure is already relied upon for the security of millions of dollars by many leading DeFi applications.
Digitex plans to start using Chainlink’s Price Reference Contracts to support trading of their initial market of BTC/USD Perpetual Contracts, and add additional price feeds as they launch more products. Digitex has created a level playing field for traders providing new levels of transparency into how Digitex’s contracts function, with backup security to protect against abnormal events.
They will use Chainlink’s Price Reference Contract as a price anchor and monitor if their internal feeds ever deviate from it by more than a defined percentage.
BlockPegnio integrates Chainlink Oracles for on-chain verified randomness in game interactions
BlockPegnio announced the implementation of Chainlink’s VRF (Verifiable Randomness Function) for the creation and upgrading of in-game tokenized blockchain assets.
BlockPegnio is a blockchain-focused innovation project for the video gaming industry. They want to use their products as an introduction of blockchain technologies to the mass market. Chainlink VRF provides players with assurances that the outcome of critical interactions, such as the crafting and enchanting of in-game items, is fair and verifiably random.
The Six Dragons’ players will have access to auditable evidence that their NFT-backed assets are created with tamper-proof randomness. In the game, players can craft and upgrade more than 300 NFT-backed items. As all the items are decentralized, players are the true owners of their digital assets. Crafting a legendary item or improving its stats has great influence on its utility. But this process also comes at a risk, as a negative in-game outcome can harm its value. By utilizing Chainlink’s VRF in these situations, players can verify that the outcome of their efforts was generated in a provably fair manner.
Vite Labs Announces Plan to Use Chainlink for its Decentralized Oracles
Vite Labs are planning to integrate with Chainlink. Their initial planned focus will be on augmenting the value of ViteX and VitePlus. ViteX is a decentralized exchange built on the Vite public chain, a DAG-enabled smart contract platform. As examples, introduction of index and derivative products on the exchange would require off-chain data feeds. The second avenue of interest is for VitePlus, Vite’s blockchain-as-a-solution for government and enterprises. VitePlus will require a variety of “real-world” data feeds that are not native to the blockchain. Chainlink can provide the aforementioned data feeds.
How Chainlink Enables DMM to Bring Real World Assets On-Chain
With DeFi Money Market (DMM), users from anywhere in the world with a simple internet connection are now able to earn a stable permissionless yield on their savings backed by a decentralized money market of interest generating real world assets. Bringing real world assets on-chain means DMM is helping grow Ethereum’s DeFi ecosystem as a whole. The yield DMM generates is not from cryptocurrency leverage traders, but from demand for real world assets that are used by billions of people all over the world everyday, including but not limited to automobiles, real estate, and aviation.
How DMM Uses Chainlink Oracles to Maintain a Fully Collateralized, Transparent, and Trust Minimized Money Market
The process begins with the user making an initial digital asset deposit into the DMM Ecosystem. This can be done on the DMM Swap page or in another DeFi application which is plugged into the DMM, hence the “Money Lego” nature of Ethereum and DeFi applications. In exchange, the user receives an equal value of mTokens (e.g. mUSDC for USDC, mDAI for DAI, and mETH for ETH). Because mTokens conform to the ERC20 standard, users can transfer these mTokens and use them in many DeFi applications and standard Ethereum wallets. mTokens continually generate interest over time and can be exchanged back to the original deposited asset along with any accrued interest.
The user’s deposited digital assets now sit within DMM’s smart contracts, with their value being added to the overall collateralization of the entire DMM Ecosystem. The value of a user’s mTokens (mUSDC, mDAI, mETH) can be determined by querying the mToken smart contract for the current exchange rate between that particular mToken and its underlying digital asset. For example, the valuation of a user’s mDAI can be easily found by querying the mDAI contract for the current exchange rate and multiplying that by how many mDAI tokens the user holds. This returns the valuation in DAI, but the USD valuation can easily be found by multiplying the resulting value by the price point given by Chainlink’s DAI/USD Reference Price feed.
This process enables users and applications to know the valuation of their mTokens in USD. However, the metric most crucial for the health of the overall DMM system is the active collateralization ratio. In a healthy system, this value should be greater than 100% to ensure every mToken issued has an equal or greater than valuation of the collateral backing it. This collateralization ratio is found by dividing the aggregate value of all collateral within the DMM ecosystem (a mixture of digital assets, real world assets, and intermediate fiat currency) by the aggregate value of all currently circulating mTokens, including interest due. Finding this collateralization ratio requires using three separate price metrics fed from Chainlink’s decentralized oracle networks.
Calculating the Value of Digital Assets Held on Reserve
While a large portion of the deposited digital assets will be sold for interest-generating real world assets, a portion will remain statically held as digital assets in the contract to enable liquidity for user withdrawals. This is known as the reserve ratio which is set at 50% although it’s currently residing at above 100% to support the growth of an initial liquidity pool.
In order to continually determine the collective valuation of these digital assets, DMM’s smart contracts fetch price data by pulling from Chainlink’s Data Reference Networks. For example, to find the value of ETH deposited and held within the ecosystem, DMM’s smart contracts query Chainlink’s ETH/USD Price Reference Contract, which aggregates the ETH/USD price delivered from 21 security reviewed, sybil-resistant Chainlink nodes. Each of these nodes source data from premium data providers such as BraveNewCoin, CoinMarketCap, Kaiko, and more. Instead of aggregating a static set of exchange APIs, these data providers aggregate their price data across all liquid exchanges. Chainlink’s ETH/USD Price Reference contract is updated every 0.5% deviation in price, with a time-based update (heartbeat) at least every three hours.
DMM also uses Chainlink’s DAI/USD and USDC/USD price feeds for the mDAI and mUSDC tokens respectively. Note that the USDC/USD feed was created by multiplying the USDC/ETH feed by the ETH/USD price feed. Any future digital assets added to the DMM Ecosystem (e.g. USDT, sUSD, PAX) will also use Chainlink Data Reference Networks to query the current market-wide price of a digital asset.
The DeFi Money Market ecosystem is currently operating live on Ethereum Mainnet and continually paying 6.25% APY on user’s ETH, DAI, and USDC. You can find out more information by checking out their Website, Swap app, Explorer page.
Lien to Integrate with Chainlink and Use Its ETH/USD DeFi Oracle
The Lien protocol is a system for crypto derivatives that can operate autonomously without the need for an artificial governance mode.
There are several reasons for using Chainlink as an oracle within the Lien protocol, including:
- Stable operation
- Frequent and accurate price updates
- Establishment of a permanent operating system that allows the same contract address to be used even when there is an update on the Chainlink platform.
The Lien protocol will specifically integrate with Chainlink’s ETH/USD Price Reference Contract.
The Lien protocol leverages the Chainlink ETH/USD oracle for the following three purposes;
1. Calculating the settlement prices of SBT and LBT
Lien returns ETH on the maturity date for SBT and/or LBT, whose prices are determined based on the ETH/USD price on the contract maturity date. As such, it is extremely important that the price is accurate. The protocol references to the price information provided by the Chainlink oracle when calculating the amount of ETH to be returned upon maturity.
2. Confirming the eligibility of collateral when minting iDOL or in emergency auctions
Lien confirms the eligibility of SBTs deposited when iDOL is issued. Here, the protocol needs to be able to reference the ETH/USD price frequently.
3. Deriving spreads for Lien FairSwap
Spreads observed on the Lien FairSwap platform will fluctuate according to the volatility of the ETH/USD market. Chainlink will provide relevant information, which the Lien protocol will then use to calculate the volatility. This is done on a rather frequent basis.
Bringing Chainlink Oracles to Cosmos
Kava is actively onboarding Chainlink’s reference price oracles onto the Kava blockchain, making them available to the entire Cosmos ecosystem. Any Cosmos Hub will be able to query the Kava blockchain to obtain a variety of high-quality DeFi data powered by Chainlink’s decentralized oracle network. Useful data sets include prices for cryptocurrency, fiat currency, commodities, interest rates, FX rates, and other important financial information.
Through a native integration of Chainlink oracles, Kava becomes the one-stop-shop for Cosmos chains that need DeFi services or data to augment the value of their own financial applications.
Decentralized and Scalable Oracle Security
Chainlink is the only oracle network that provides a framework for scalable security. Developers can scale horizontally by adding more node operators to a decentralized oracle network as their need for greater decentralization increases.
All Chainlink nodes supplying data to Kava have been through a rigorous security review process, many of them also make up Kava’s own core node operators. The ability to overlap high-quality node operators with Chainlink greatly reduces the attack surface area of the oracle mechanism relied on by Kava. Kava also plans to explore Chainlink’s Town Crier — TEE-based oracle for TLS verification — for even greater assurances to data’s origin.
Crypto-economic Guarantees of Liveness and Data Quality
Chainlink is also developing a framework to provide crypto-economic guarantees of liveness and data quality via service level agreements (SLA) and penalty deposits (staking). SLAs are binding on-chain agreements between the consuming smart contract and the node operator that very clearly outline the terms of service, including the expected performance of the node operator and the penalties for failing to deliver on that performance.
Kava Expands Access to Chainlink Oracles
Easily Accessible Oracles for Cosmos
Kava is the natural hub for DeFi services within Cosmos. Most major blockchains will bridge and connect to Kava for lending, stablecoins, and other DeFi services. With cross-chain infrastructure already built between Kava and other blockchains, it is natural to provide price and market data through the same connections.
Faster, More Reliable, and Lower Cost Oracle Data
Chainlink oracles on Kava provide superior services due to faster block times with finality and significantly lower transaction fees. This enables Chainlink oracles to post faster price updates, at cheaper rates, and provide a superior experience to DeFi applications and blockchains. This alleviates concerns over gas fees, congestion, and other issues experienced on other networks.
Enhanced Security Incentives
The overlap of Chainlink node operators and Kava validator nodes increases security and alignment. Chorus One, Cosmostation, P2P, B-Harvest, SNZ, and many other top Chainlink node operators have significant Kava at stake and run Kava validator nodes. This further aligns node operators to behave as good actors on the network and operate in ways that are aligned with the long-term growth of the network.
DeFi Applications Need Quality Oracles
The reliability of DeFi applications is determined by the financial market data they consume, making data quality standards a critical first step to any serious blockchain project. Understanding this demand, Kava identified early on that there wasn’t a sound oracle solution within Cosmos to serve its lending platform, nor the 110+ Cosmos projects thirsty for data.
Because of Kava’s unique scalability properties, bringing Chainlink oracles into that ecosystem allows an increase in the ability to generate more frequent price updates, greater resiliency to congestion on Ethereum, and therefore reduces data costs, while extending Chainlink’s reach to the 110+ projects within Cosmos valued at over $3.8B. High quality price reference data will soon be available to the entire Cosmos ecosystem and serious DeFi applications can finally have a reliable price data solution they can count on.
Kadena Collaborates with Chainlink in Industry’s First Hybrid Blockchain Oracle Integration
Scalable layer-1 PoW public network, developed by former JP Morgan blockchain team, will deploy Chainlink’s oracles for tamper-proof on-chain data feeds
Chainlink and Kadena are working together to integrate Chainlink’s market-leading decentralized oracle network to Kadena’s scalable layer-1 Proof of Work public blockchain. Enterprises and entrepreneurs in the Kadena ecosystem can utilize Chainlink oracles to create end-to-end Pact smart contracts using Chainlink’s large collection of pre-made inputs and outputs. Kadena developers can benefit from Chainlink’s high-quality data by building Price Reference Contracts for market prices and leveraging its external adapter technology for off-chain access to credentialed APIs and legacy systems.
Kadena has already identified use cases where the live data accuracy of Chainlink’s oracles will service key functionality for on-chain applications. The initial implementation will likely be a KDA price oracle feed, available to dApp developers and exchanges. When Kadena’s KDA token gets a major listing, currently projected for the second or third quarter of this year, reliable fiat-denominated price feeds for KDA will become important for enterprises wanting to pay for gas in traditional currencies. Dependable and instantaneous market data will also be a requirement for launching many decentralized and traditional finance applications, such as with Kadena’s ongoing collaboration with $3 billion asset manager USCF. Furthermore, Kadena can provide a critical tool for addressing the COVID-19 pandemic by using Chainlink oracles to validate coronavirus testing kits and test results. Over time, Kadena and Chainlink look forward to sharing additional information about the industry’s first integration of leading oracles with a hybrid blockchain.
Kadena will leverage its scalability and low gas fees to increase the frequency and accuracy of external data available on the network, thus creating a cost-efficient and high-quality platform for DeFi and other decentralized applications.
Other
Community Content & Celebrations
· Bancor Video: Listen to Bancor’s Head of Product on BancorV2’s, Chainlink integration.
· DMM Blog: How Chainlink Enables DMM to Bring Real World Assets On-Chain by Zachary Rynes of DMM
· Kava Blog: Bringing Chainlink Oracles to Cosmos by Sarah Austin
· Lastmjs.eth, the developer of btconethereum.com and usdonethereum.com says, “integrating the Chainlink feeds was incredibly simple and an amazing experience!”
· @PureNukage launches a 2nd Chainlink themed game where you can learn how Chainlink works and the importance of decentralized data, SmartContractBuilder.io.
Mentions in the Press
18 May, TheDailyHodl: Chainlink Partners With Korean Tech Giant to Boost Blockchain and Crypto Mass Adoption
19 May, BlockTribune: Kadena, Chainlink Partner In Industry’s First Hybrid Blockchain Oracle Integration
19 May, FinanceMagnates: Kadena Integrates Chainlink’s Price Oracle
19 May, CoinDesk: Hybrid Blockchain Maker Kadena Adds Chainlink Price Feeds
19 May, CryptoNewsFlash: Chainlink partners with blockchain project of Korean tech-giant Kakao
19 May, CrowdfundInsider: Chainlink’s Decentralized Oracle Network to be Integrated with Kadena’s Proof of Work based Blockchain Network
20 May, Finder.AU: Chainlink gets world’s first hybrid blockchain oracle integration
The graph above illustrates changes in the number of Chainlink Reddit subscribers and Twitter followers. The information is taken from Coingecko.com.
This report is not financial advice.
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