Clover x Chainlink | Empower Cross-Chain DeFi Between Polkadot and Ethereum
We are excited to announce that Clover will be integrating market-leading decentralized oracle network Chainlink as the preferred oracle solution for developers needing external data. The initial integration will focus on supplying Clover developers with secure and reliable price data and information on the state of external blockchains, while also providing a flexible framework to connect with any off-chain resource. By doing so, the Clover ecosystem can natively support a wide range of DeFi applications, as well as improve the transparency and auditability of Clover’s cross-chain dApps and assets.
The Clover Ecosystem Needs External Data
Clover is a Polkadot parachain, committed to providing easy‑to‑use blockchain infrastructure and creating a one‑stop EVM compatible framework for Substrate‑based applications. By being EVM compatible, it’s easy to deploy Ethereum dApps on Polkadot and create trustless two‑way pegs between ERC20 and DOT‑based assets.
In order to fulfill our ultimate goal of enabling cross-chain DeFi between EVM-based chains and Substrate-based chains, there is a pressing need for external data. For example:
- Price Feeds need to be referenced during certain on-chain functions in order to get accurate and up-to-date valuations on the assets used within DeFi dApps, such as to issue loans, check loan collateralization, swap synthetic assets, and more.
- Proof of Reserve data is necessary to verify the collateralization of wrapped assets ported between blockchains, ensuring a 1–1 ratio between underlying reserve assets and wrapped synthetic tokens.
- External Blockchain State is key to token bridges, particularly minting/burning wrapped assets once they have been locked/unlocked on an external chain. Also, combining price feeds and external blockchain states can enable automated cross-chain transactions like swaps and liquidity provisions based on specific market indicators (e.g., cross-chain limit orders determined by an asset price).
- Other Market Data can be leveraged to create many unique DeFi products, such as derivatives, rebasing assets, and automated on-chain asset management strategies based on data like the current crypto market cap, implied volatility, interest rates, etc.
However, since blockchains can only perform computation on data already stored on-chain, Clover requires integration with a blockchain oracle solution in order to facilitate the execution of on-chain state changes based on off-chain data and events.
Integrating Chainlink Oracles
After reviewing various oracle solutions, we found Chainlink to be the most time-tested and battle-hardened oracle solution in the market when it came to data quality, secure oracle infrastructure, and hyper-reliability, even during extreme network congestion and spiking gas prices. Hence, why we recommend that any developer needing external data to use Chainlink oracles as a means of obtaining maximum security and reliability of their oracle mechanism.
One of Chainlink’s most popular oracle solutions is their Price Feeds — an extensive collection of pre-built decentralized price oracles, which collectively secure over $15B in USD value for many leading DeFi dApps like Synthetix and Aave. Each Chainlink Price Feed consists of a decentralized network of security reviewed and Sybil-resistant oracle node operators run by leading blockchain DevOps and security teams. These nodes fetch data from numerous premium data aggregators like BraveNewCoin and Amberdata, which each source price data from across centralized and decentralized exchanges, weight it by volume, and filter outliers. The end result is Clover developers getting highly accurate, available, and manipulation resistant price data that’s inherently resistant to exchange/oracle node downtime, inaccuracies, and data manipulation attacks, such as those carried out using flash loans.
In addition to price feeds, Chainlink External Adapters will allow developers to query data from any external API, meaning any off-chain data point can become accessible on Clover. Chainlink also has Proof of Reserve oracle functionality, which enables users to create reference data feeds that monitor the collateralization of cross-chain assets. This collateralization data (locked reserves vs. wrapped synthetic tokes) can be used to trigger alerts and preventive actions should any cross-chain assets ever become undercollateralized, such as not approving loans that use undercollateralized assets.
“Integrating Chainlink is critical to onboarding many exciting EVM-based projects into the Polkadot ecosystem via Clover’s cross-chain protocol. With support from Chainlink, developers have access to core oracle infrastructure for building a variety of DeFi applications, including price data, external blockchain state, and ultimately any off-chain resource they require. This will ensure a seamless transition to a Substrate-based chain and/or cross-chain functionality, along with strong assurances that these processes are highly secure and reliable.”
We are excited to see how smart contract developers leverage Clover in new and interesting smart contract deployments thanks to the new Chainlink addition. If you’re a builder and would like to implement the new feature into your smart contract applications, check out our docs to get ready for deployment as soon as Clover hits public mainnet and its Polkadot parachain auctions are settled.
Chainlink is the most widely used and secure way to power universally connected 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.
Chainlink is trusted by hundreds of organizations to deliver definitive truth via secure, reliable data feeds. To learn more, visit chain.link, subscribe to the Chainlink newsletter, and follow @chainlink on Twitter.
Clover is a powerful smart contract platform that enables Ethereum developers and projects to migrate their contracts onto Polkadot. By minimizing the changes required to run existing Solidity smart contracts on the new network, Ethereum projects can simply replicate their dApp and deploy it to Clover using MetaMask, Truffle, Remix, and other familiar tools.