Financial contracts are data-driven instruments that react to market events, such as the price change of an underlying asset. Smart contracts, in particular, are automated financial products, meaning the data directly triggers the execution and settlement of the contract as opposed to employing a human intermediary. As a result, the security and reliability of data sourcing and delivery for the smart contract are paramount to realizing the value of DeFi.
Due to the way blockchains form consensus, they cannot natively perform computations in a secure manner on data that exists outside the blockchain (off-chain). This presents a major roadblock for DeFi, as most of the liquidity that drives accurate price discovery cultivates off-chain across both centralized and decentralized exchanges. The only way to interact with and aggregate this data is through an oracle, acting as a middleware between the two environments. However, the oracle mechanism must be as secure as the underlying blockchain to maintain end-to-end security of the smart contract.
Chainlink is a decentralized oracle network that currently provides decentralization at both the oracle and data source level. By using multiple independent Chainlink nodes, the user can protect against one oracle being a single point of failure. Similarly, using multiple data sources for sourcing market prices, the user can protect against one data source being a single source of truth.
Chainlink already offers secure and reliable market data via their Price Reference Contracts, a collection of decentralized oracle networks currently live on mainnet that secure 25+ DeFi price feeds, such as ETH/USD, CHF/USD, ETH/BTC, etc. Each Price Reference Contract is backed by at least seven of the 30 independent, security reviewed, and Sybil resistant nodes. These nodes source market data from a large pool of different highly respected data aggregator APIs, with at least seven deployed on each oracle network. The nodes’ individual responses are then aggregated together into a single data point and updated on-chain at specified intervals, such as by time (daily), deviation (every .5% change in price), or a customized combination of both (minimum once a day + 1% price deviations).
We plan to make Chainlink the oracle solution for both this initiative and the standard across all Solana Dapps. By doing so, Dapps will get secure access to all the inputs and outputs they need, while avoiding the major pitfalls with trying to deploy self-made oracles, such as long time delays, additional expenses, and even fatal security flaws.
Continually expanding the boundaries of DeFi
We believe that this infrastructure can empower developers to create products that match traditional platforms in speed and usability, while also providing opportunities for new financial products that are only possible by leveraging the inherent properties of blockchain.
We’re thrilled to work with the Chainlink team to undertake this challenge, as they are quickly cementing themselves as the standard oracle solution in the industry. Their team of oracle experts is unmatched in their speed of execution, ability to deliver, and communication. Their expertise allows us greatly to accelerate development time, as well as create a high-performance oracle solution that fits our unique needs. Backed by Chainlink’s tamper-proof inputs and outputs, we can bring immense value to the DeFi market via high-performance binary options without having to worry about ongoing security risks.
Solana couples the Chainlink oracle with a non-sharded, low-latency, high-capacity replicated state machine. We can help with the oracle and marketplace problem by offering more block producers per second, more traders per second, and more price feeds per second. If you design your marketplace such that it behaves fairly and if at least one honest block producer participates in a certain time window, then our performance can help maximize the odds of an honest block producer participating in the market. To offer some concrete numbers, Ethereum blocks are produced every 15 seconds. Solana has 400 ms blocks, with block producers rotating every four slots (1600ms).
Solana has announced the Solana Accelerator and is encouraging developers to build decentralized finance products of all types using this integration. The accelerator is looking for high-quality, experienced teams to offer office space, fundraising support, grants, and mentorship.
Solana is a high-throughput blockchain that is currently supporting 50–65k transactions per second and 400ms block times, without complex solutions like sharding or layer-two. As the world’s first web-scale blockchain, Solana will unlock a whole new class of performant applications and facilitate larger scale blockchain adoption. Utilizing a revolutionary innovation called Proof of History, Solana is drastically able to outperform any other existing layer 1 and provide fees at $0.00001 per transaction.
If you’re a developer and want to connect your smart contract to existing data and infrastructure outside the underlying blockchain, reach out to us here! We can help you quickly and securely launch your data-enabled application or Chainlink Price Reference Data Contract on mainnet today. You can also visit the developer documentation or join the technical discussion on Discord. Learn more by visiting the Chainlink website or follow us on Twitter or Reddit.
Chainlink is a decentralized oracle network that enables smart contracts to securely access off-chain data feeds, web APIs, and traditional bank payments. It is well known for providing highly secure and reliable oracles to large enterprises (Google, Oracle, and SWIFT) and leading smart contract development teams such as Polkadot/Substrate, Synthetix, Loopring, Aave, OpenLaw, Etherisc, Conflux, and many others.