DAFI Protocol Collaborates with Chainlink to Power New Incentivization Model for DeFi Protocols
After reviewing various decentralized oracle solutions, DAFI Protocol is pleased to announce a collaboration with Chainlink. Cryptocurrency Data Feeds will be crucial for DAFI to price all synthetic dTokens offered through its state-of-the-art reward distribution mechanism and obtain volume data from a variety of blockchains and APIs.
Chainlink will ensure DAFI provides a reliable service for DeFi projects looking to create a long-term token distribution model that rewards early participants without the pitfalls of hyperinflation.
Combining DAFI Protocol and Chainlink for Advanced Reward Distribution Model
DAFI is designed to solve the growing problem of unbalanced incentives within the early stages of Proof-of-Stake protocols. Decentralized projects tend to distribute tokens to grow their network using various incentives like staking rewards, contribution bounties, and liquidity mining. But the problem with this static incentive rate is that it assumes the same level of demand at launch than 10 year years into the future.
While network governance can adjust these rates, the process can be subject to disingenuous actors looking to make fast money rather than build towards long-term sustainability, which usually results in hyperinflation and scarce funds for future development.
To solve the challenges in the current rewards model, DAFI Protocol takes a dynamic algorithmic approach, where tokens are issued to users based on the network activity.
For instance, a low protocol usage results in an automatic reduction of rewards issued, helping mitigate inflation concerns. Conversely, a spike in the adoption rate automatically increases incentives to drive stronger network effects.
Accomplishing an equilibrium between supply and demand requires a high-quality source of asset valuations and network volume, which are key to calculating accurate rewards.
Zain Rana, Founder at DAFI Protocol, believes that an integration with Chainlink was impending because this is one of the most secure and fully-functional decentralized oracles solutions providers in the industry. It helps fetch data from premium off-chain sources and transmit it on-chain in a tamper-proof and highly reliable manner.
“Accurate and tamper-proof data is critical to the proper functioning of our new rewards issuance model, which is why we selected Chainlink as our go-to oracle solution to secure its operation. Incentives are core to the entire decentralized space, and our algorithmic distribution model secured by Chainlink’s decentralized data feeds opens up a new type of token distribution mechanism that creates much needed long-term incentives for supporting decentralized networks that succeed in becoming widely adopted,” said Zain.
Some of the critical features that Chainlink Data Feeds offers include:
- High Quality Data — Chainlink Data Feeds source market information from premium data providers, leading to data that’s aggregated from multiple sources and cleaned of outliers. This leads to data precision in a manner that’s resistant to API downtime and data manipulation attacks.
- Secure Node Operators — Chainlink Data Feeds are secured by independent, security reviewed, and Sybil-resistant oracle nodes run by leading blockchain DevOps teams, data providers, and traditional enterprises. Chainlink nodes have a strong track record for reliability, even during high gas prices and infrastructure outages.
- Decentralized Network — Chainlink Data Feeds are decentralized at the data source, oracle node, and oracle network levels, generating strong protections against downtime and tampering by either the data provider or oracle network.
- Economy of Scale — Chainlink Data Feeds benefit from an economy of scale effect, where increasing adoption allows multiple projects to collectively use and fund shared oracle networks to fetch commonly required datasets. This allows DAFI to get premium data quality and robust oracle security for a fraction of the total cost.
Daniel Kochis, Head of Partnerships at Chainlink, maintains that the new integration could benefit the entire DeFi sector as DAFI will have high-quality asset prices and volume metrics available on-chain to its new rewards model. The collaboration will essentially enable DAFI to create innovative ways to fairly and transparently incentivize long-term project growth.
“This integration allows DeFi users to leverage DAFI’s algorithmic rewards system with the assurance that the data underpinning the protocol is secured by the industry’s proven standard for accurate, tamper-proof data,” said Kochis.
Moreover, DAFI recently added support for Chainlink’s native token, LINK, in its first synthetic application dubbed Simulate. The integration enables users to create dLINK tokens, which are pegged to the underlying asset’s value and demand. Such features set the foundation for further expansion of the collaboration between Chainlink and DAFI.
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.
About DAFI Protocol
DAFI Protocol reinvents how every decentralized network is rewarded. By creating synthetics pegged to different decentralized networks, every blockchain and cryptocurrency can create a dToken flavor to reward their early users while still enhancing scarcity when demand is low.
DAFI can reward a network even when demand declines by issuing synthetics that will reward user’s later — instead of earlier. This approach will change the foundation of all staking, liquidity, and even social reward systems for the entire decentralized world.