Deerfi Integrates Chainlink to Support its Lending Protocol for Uniswap LPs
We are excited to announce that the Deerfi money market is using Chainlink Price Feeds live on mainnet to price crypto-assets used in our lending and borrowing operations. The initial integration includes ETH-denominated price feeds for 11 different assets, including ETH, BTC, USDC, USDT, and UNI. These Chainlink-powered decentralized Price Feeds provide Deerfi with highly accurate, available, and tamperproof price data that our smart contracts use to issue fair market loans and maintain full collateralization.
Liquidity providers currently supply over $2 billion in assets to liquidity pools. Once deposited, they are given Liquidity Pool (LP) tokens as a claim on those assets. By providing liquidity, users can earn passive interest via trading fees, but give up most opportunities to deposit or exchange those LP tokens elsewhere outside of highly specific yield farming token interfaces, despite LP tokens having intrinsic value.
Deerfi offers a new money lego to support LP token holders, wherein users can now deposit Uniswap Liquidity Provider (LP) tokens as collateral for loans on Deerfi. For example, users can deposit USDC-USDT Uniswap LP tokens into Deerfi as a means of borrowing more USDC and USDT to provide extra liquidity on Uniswap. As long as Uniswap’s liquidity earning rate is higher than the borrowing interest in Deerfi, users can receive more income than before. Moreover, users can collateralize USDC-USDT LP tokens and borrow ETH and USDC to participate in the Uniswap liquidity mining program for earning UNI.
One security challenge we face is that quoting token and LP token prices directly from Uniswap is not reliable and subject to Flash Loan attacks. That is, if someone uses a flash loan to impact prices in a pool on Uniswap, collateral that relies on that pool’s price as an oracle could be subject to faulty liquidations.
Instead, we selected Chainlink Price Feeds as our go-to oracle networks due to their ability to mitigate against such data manipulation attacks like flash loans. Some features of Chainlink Price Feeds that make them secure and reliable include:
- High-Quality Data — Price data is sourced from numerous premium off-chain data aggregators, ensuring each price point reflects a volume-adjusted aggregate from all trading environments as opposed to a single exchange.
- Secure Oracle Nodes — Oracle networks are made up of multiple Sybil-resistant nodes run by leading security and blockchain DevOps teams.
- Decentralized Computation — Each Price Feed is decentralized at the oracle and data source level, leading to high availability and manipulation resistant oracle data and services.
- Transparent Processes — Chainlink provides open visualizations on each oracle network, allowing users and developers to independently monitor their performance.
An example Price Feed visualization for ETH/USD.
We’re excited to provide secure and reliable lending operations powered by Chainlink oracles, and look forward to launching additional Chainlink Price Feeds as demand for Deerfi market continues to grow.
“Deerfi provides an extra layer of composability for Uniswap LP tokens, enabling LPs to generate more yield with their assets than ever before,” said Deerfi Lead Developer Lin Xia Hong “Chainlink helps us unlock that value of LP tokens by ensuring that they are accurately priced without being subject to data manipulation attacks carried out on a single exchange. This allows users to interact with Deerfi knowing that it’s lending functions operate according to fair market prices, greatly increasing user trust in the protocol.”
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.
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.
Join Deerfi Community
As we just listed a limited amount of assets, we are keen on hearing users’ voices and growing into a valuable money market backed by our community members. We cannot wait to receive your feedback and discuss the future of Deerfi on Discord and Telegram. Also, please stay tuned with our latest Deerfi update on Twitter.