Equilibrium will Use Chainlink Price Oracles to Power Stablecoins, Lending, and Synthetic Assets on Polkadot
Equilibrium is excited to announce an upcoming Chainlink Price Feed integration to power stablecoins, lending, and synthetic assets on our cross-chain money market on Polkadot. Chainlink Price Feeds will provide our smart contracts with accurate asset valuations to properly issue loans, price collateral, and execute trades of synthetic assets, all in a completely decentralized manner.
For more detailed information about how our DeFi products are interrelated, you can read about our Token Economy.
Chainlink has become the most widely-used oracle in DeFi, collectively securing over $4B in USD value for many leading DeFi projects. We selected Chainlink as our go-to provider for price oracles not only because it’s a proven time-tested solution, but because it has several technological features not found in other oracle solutions, including:
- High-Quality Data: All price data is sourced from numerous premium off-chain data aggregators, providing us with extensive market coverage across all trading environments to ensure we’re protected against low-volume data manipulation attacks.
- Decentralized Oracle Network: Each Price Feed is secured by a decentralized network of independent, security reviewed oracle node operators run by experienced blockchain and DevOps teams, ensuring us strong resistance to downtime, Sybil attacks, and single oracle manipulation.
- Price Transparency: Chainlink Price Feeds are accompanied by visualizations tracking the real-time performance of the oracle network and its individual nodes, increasing our platform transparency in a manner that any user can independently audit on-chain.
“We look forward to providing Equilibrium with a robust set of price oracles that provide real-time valuations on assets used within its DeFi platform,” said Daniel Kochis, Head of Chainlink Business Development. “Chainlink’s high quality data and decentralized oracle infrastructure ensures that all price feeds are highly accurate, available, and resistant to manipulation, empowering users with trustless interactions with Equilibrium’s DeFi protocols.”
Let’s take a closer look at Equilibrium’s products to see how they work with Chainlink price feed oracle networks.
The point of stablecoins is to reduce the volatility inherent in digital asset prices. They are both decentralized and resilient against market fluctuations, which is augmented by Equilibrium’s unique risk management system and programmatic interest rate.
Equilibrium users will be able to generate decentralized stablecoins on the blockchain of their choice by supplying different forms of collateral. Chainlink price oracles are used to calculate the value of a user’s collateral to both issue fair market loans and maintain full collateralization of all loans. Without oracles, our smart contracts cannot access external data feeds and therefore cannot properly function.
Borrowing & Lending
Equilibrium enables non-custodial, multi-asset, cross-chain lending. Users can leverage multi-asset collateral baskets to borrow both stablecoins and other major crypto assets on Equilibrium. Chainlink will allow Equilibrium to continually obtain real-time crypto-asset prices to mark-to-market the loan collateral in the system, once again allow Equilibrium to issue and maintain collateralization ratios.
Equilibrium’s price discovery system, which will also be facilitated by Chainlink Price Feeds, ensures a crucial part of overall system stability. As borrowers take out loans and prices fluctuate, the system can become riskier, which causes the interest rate pricing to adjust and drive the entire system to a predefined liquidity target set by our system governance.
Synthetic assets are tied to the value of other underlying assets (e.g. synthetic gold is tied to the real world price of gold). Equilibrium users will be able to use their collateral to generate synthetic assets based on the underlying exchange rates supplied by Chainlink Price Feeds. They will also be able to trade these synthetic assets in accordance with Chainlink Price Feeds in a decentralized manner on Equilibrium’s substrate.
Clients will be able to count their synthetic assets as another user’s liability, thus introducing a fractional reserve feature which allows us to expand and further leverage the supply of these assets. This is similar to fractional reserve banking practiced by the worldwide banking system. Synthetic assets may be exchanged easily without an on-chain order book and matching engine, essentially constituting a swap of one kind of asset or liability for another.
How Integration Between Equilibrium and Chainlink Works
Equilibrium will use the Chainlink oracle pallet inside its own substrate. There will be a whitelist of nodes/validators that feed prices to Equilibrium as sourced from Chainlink.
Later, when parachains appear on Polkadot, Equilibrium will integrate with the Chainlink parachain using cross-chain messaging by establishing message channels between two chains.
Equilibrium’s CEO Alex Melikhov says “We’re excited to bring cross-chain DeFi to Polkadot, and enable money legos across chains. The Chainlink integration is an easy choice for us to be able to show our users that we’re treating their funds with the utmost security and care. As the most secure and decentralized blockchain oracle, Chainlink ticks all the boxes to help us bring secure DeFi products quickly to market.”
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.
Equilibrium is the first decentralized cross-chain money market that combines pooled lending with synthetic asset generation and trading. Equilibrium is set to open up the vast potential of the DeFi market and become its #1 app by offering exceptional services to the users of major crypto assets that were previously isolated. Visit: equilibrium.io