B.Protocol Integrates Chainlink Price Feeds on Mainnet to Track Backstop Performance and Protect Liquidators
We are excited to announce that B.Protocol, which launched on mainnet last week, is now using Chainlink Price Feeds to estimate liquidation profits. In the initial implementation, the price oracles are used to prevent liquidators from a non-profitable operation, and in the future can be used by the B.Protocol governance to assess a backstop member’s performance.
We selected Chainlink due to its unmatched guarantees when it comes to high-quality price data, secure and reliable oracle infrastructure, and it’s proven time-tested performance on mainnet, currently securing over $4B in value for many leading DeFi applications like Aave and Synthetix.
Background on B.Protocol
B.Protocol is a smart contract interface around existing lending platforms, with a live mainnet version over MakerDAO. You can use our app at http://bprotocol.org/app
Having recently launched on mainnet, B.Protocol is a backstop layer on top of decentralized lending platforms, which improves liquidator incentives, and thus makes the platforms they operate on more stable against insolvency. In return, liquidators reward end-users who use the interface by sharing their liquidation proceeds. By doing so, B.Protocol generates a win-win-win situation, where: (1) MakerDAO users get more from the funds in their Vaults (2) MakerDAO as a platform gets more committed liquidators; and (3) Liquidators get better incentives to protect the platform.
The Chainlink Integration
The B.Protocol interface is designed to offer lending platform users exactly the same conditions they get in the underlying platform. Hence, it is using the underlying platform price feed as the reference price to determine the conditions of a liquidation.
However, at this point the protocol allows its backstop to avoid liquidations at prices that will result in a loss. For this purpose, we have integrated with Chainlink to query the current market prices of ETH/DAI (which is our first supported pair).
The liquidators will be able to develop a smart contract that would prevent them from executing a liquidation that will result in a loss, and on the other hand, future governance would be able to hold accountable a liquidator that did not act, despite favorable market conditions, by comparing his expected returns to the Chainlink price feed.
What is Chainlink?
Smart contracts provide the ability to execute tamper-proof digital agreements, which are considered highly secure and highly reliable. In order to maintain a contract’s overall reliability, the inputs and outputs that the contract relies on need to be as secure as the underlying blockchain.
Chainlink offers a framework for building decentralized oracle networks that securely and reliably deliver high-quality data to smart contracts. Developers can aggregate multiple independent oracles and multiple data sources to create a highly available and manipulation resistant data point that is delivered to the smart contract. This allows decentralized applications to interact with off-chain resources while retaining their end-to-end security.
To accelerate DeFi development, the Chainlink Network provides the largest collection of reliable on-chain price feeds for DeFi. All Chainlink price reference data feeds are secured by decentralized oracle networks made up of Sybil resistance node operators, which source data from numerous premium data aggregators to maintain strong market coverage across all trading environments. Each price feed is transparent in its processes and viewable here.
“A timely and accurate liquidation mechanism is foundational to the security and reliability of a decentralized lending protocol. B.Protocol liquidators are glad to work with a reputable project like Chainlink and its proven decentralized oracle network to provide reliable price feeds for our liquidation system. Doing so allows users to further trust the underlying DeFi protocols that B.Protocol supports.” — Yaron Velner, CEO & Founder of B.Protocol.
“We look forward to supplying B.Protocol’s liquidators with high-quality price data to empower a more trusted and efficient liquidation process. Combined with Chainlink’s secure and reliable oracle infrastructure, liquidators can be assured that they are always operating at a profit when using B.Protocol.” — Daniel Kochis, Head of Chainlink Business Development.
Chainlink is the most widely used and secure way to power universal smart contracts. With Chainlink, developers can connect any blockchain with high-quality data sources from other blockchains as well as real-world data. Managed by a global, decentralized community of hundreds of thousands of people, Chainlink is introducing a fairer model for contracts. Its network currently secures billions of dollars in value for smart contracts across the decentralized finance (DeFi), insurance and gaming ecosystems, among others.
B.Protocol makes lending platforms more secure by incentivizing liquidity providers (keepers) to commit on liquidation of under collateralized loans and shift the miners extracted profits back to the users of the platform. B.Protocol was founded by Yaron Velner, who was previously Kyber Network’s CTO and a co-designer of the WBTC protocol.