Totem expands decentralized reference rate coverage to include Chainlink
Totem is the first Polkadot community member to integrate Chainlink
Totem, a Polkadot-based peer-to-peer accounting platform, added Chainlink price feeds to the world’s first official decentralized daily reference exchange rate (“reference rate” for short) for crypto and fiat currencies. The decentralized daily reference exchange rate, a financial instrument used in accounting, is now available on the Totem Live app, built on the Totem Live Accounting protocol. The new Totem-Chainlink integration expands the coverage of the only blockchain-based daily reference rate to include Chainlink’s extensive network of publicly available oracle data.
Totem identified Chainlink’s price feed data as the most popular decentralized price oracle solution in DeFi and used them to create daily reference rates for it’s novel blockchain accounting protocol. The reference rates are currently available directly in the Totem Live App and are being used by accountants as well as the crypto community. The addition of Chainlink to the Totem Daily Reference rate further decentralizes the overall calculation mechanism conducted in the Totem Live Accounting protocol.
Enabling non-central bank Daily Reference Rates With Chainlink
Historically, currency exchange daily reference rates have been published by central banks in a (surprise) centralized and manual process. What makes Totem’s official reference rate decentralized in nature is the use of multiple data feed sources now including Chainlink’s network of decentralized data contributors. Over the coming months, Totem will decentralize reporting on all 750+ fiat, crypto and corporate assets available on the Totem Live app.
Chainlink’s price feeds rely on a multitude of diverse entities: hundreds of exchanges and numerous independent data aggregator APIs, security reviewed oracle node operators, and the many smart contracts that consume this data as a core part of their functionality. Totem’s peer-to-peer accounting protocol computes upon Chainlink’s decentralized data feeds to determine the official daily currency exchange reference rate. This entire process is done automatically and in a decentralized manner, in contrast to the status quo.
Why Totem Built the Daily Reference Rate Based on Chainlink Price Feeds
The Polkadot ecosystem is looking for bridges to other network data. Currently, Chainlink offers a wide range of price feeds that can be bridged into Polkadot via Totem. Totem will continue to integrate other Oracle providers to support the expanding number of Polkadot parachains.
In order to select an oracle Totem assessed the following features that we believe are important for any oracle provider:
High-Quality Data: Chainlink Price Feeds offer three levels of aggregation to generate a highly accurate market price. All data sources used are data aggregators, which means each price point is aggregated from across all relevant exchanges (centralized and decentralized), weighted by volume, and cleaned from outliers. This makes their market data feeds highly accurate and, importantly, immune to exchange price inaccuracies, API downtime from data providers, and/or data manipulation attacks such as those induced from flash loans.
Tamperproof and Open-Source — Chainlink Price Feeds are decentralized at the data source and oracle node level, with the network being powered by thoroughly audited open-source software that is built upon sound academic research and open to inspection by the large developer community. We anticipate that there will be many more competitors in this space including from teams within the Polkadot ecosystem, and this will provide more stability against data manipulation for Totem’s data.
Widely Used — Chainlink Price Feeds are by far the most widely used Price Reference for DeFi protocols on Ethereum, securing billions in on-chain value, but as more chains with DeFi smart contracts open up, such as Acala on Polkadot, we see this as being an important connection.
Being widely used is key to generating Totem’s Daily Reference Rate, as Chainlink is currently seen as the go-to source in the industry for market rates. It also establishes market-wide confidence in the network’s long-term viability, generating a large network effect that people believe will not disappear or be replaced by something else.
“The quality of the data input is important to calculating a daily reference rate of any type. Chainlink’s contracts are accessible for review and the code is audited and robust. The transparent, high quality of our Daily Rates make it easier for external parties like investors or auditors to validate the entire decentralized accounting workflow and therefore the accuracy of our reference rates.” Chris D’Costa, co-founder of Totem Live
