xBTC and Chainlink Create a New Oracle to Power The Dominance Hedge
Using Chainlink Oracles Live on Mainnet to Rebase Digital Assets, Reimagining How Blockchain Tokens Function
Chainlink’s market-leading oracles allow users to broadcast any data from outside the blockchain (off-chain) onto the blockchain (on-chain), directly connecting smart contracts to the real world and empowering novel products like decentralized loans, insurance, assets, and more. Expanding upon these oracle-enabled use cases, we have integrated Chainlink with xBTC live on mainnet to launch a new product type that uses Chainlink oracles to dictate a token’s economics. This first of its kind integration creates a spot price for a novel data point that has never before had a spot price: Bitcoin Market Cap Dominance (BMCD). Having an accurate spot price that is constantly updated and resistant to manipulation allows the use of BMCD in trading, liquidity pools, options contracts, and other financial instruments.
This integration is the most direct connection that can exist between an oracle and an ERC-20, as the Chainlink price oracle determines the fluctuating supply of the token. xBTC brings two novel technologies together: rebasing and oracles. Once Chainlink feeds the current BMCD to xBTC’s smart contract, it affects the economy of the xBTC token once a day through a rebase — a change in the supply of a token. There are two types of rebases:
- Positive Rebase: If xBTC spot price is above BMCD, more supply is added to the market to push the price down to BMCD.
- Negative Rebase: If xBTC spot price is below BMCD, supply is taken from the market to push the price up to BMCD.
Through rebasing, an oracle is directly connected to the economics and spot price of a token in the most simplified way possible.
So What Is xBTC, And How Does It Work?
xBTC can be seen as a synthetic dominance hedge against Bitcoin. As BMCD falls, positive rebases trend towards happening in larger quantity and frequency. It can also be seen as a synthetic index fund on the dominance of every single altcoin on earth — as their dominance outpaces Bitcoin’s, positive rebases are more likely. This kind of index creates an on-chain, decentralized, and autonomous prediction market where traders can predict where BMCD will go and make a bet for or against every single altcoin outpacing Bitcoin.
This reimagining of synthetics and prediction markets is the first of its kind. It does not require any third party, walled garden, KYC, or any other prohibitive wall. It also is less complicated than traditional derivatives where there are many complicating factors such as expiration dates, margin trading, proprietary and complicated user interfaces, strike prices, and more. xBTC makes a synthetic derivative that is instantly and easily accessible anywhere; it’s all wrapped into one simple ERC-20 token. It is deeply aligned with the ethos of what digital assets are supposed to be: decentralized and innovative.
Using Chainlink Price Oracles to Secure xBTC Assets
Our vision for xBTC is for it to be used by large institutions and individuals alike. Therefore, in order for xBTC to work efficiently, it must have a reliable and accurate oracle to ensure the integrity, effectiveness, and reliability of the data that secures its value.
Chainlink has a strong track record of supplying price feeds that secure billions of dollars in value for many leading decentralized applications reliant on oracles. One of the main factors is the strong set of features it provides to developers, such as:
- High-Quality Data — xBTC smart contracts can use Chainlink to access premium off-chain APIs that aggregate BMCD data from multiple sources to generate the most accurate spot prices for rebases.
- Secure Network Infrastructure — Chainlink uses a decentralized network of independent, Sybil-resistant nodes to source and deliver BCMD data in order to maintain highly available, manipulation resistant oracle services.
- Transparent Process — Chainlink’s Price Feeds are highly transparent wherein users can monitor the performance of oracles to ensure that rebases are fair and accurate.
Chainlink is constantly looking for ways to push what oracles can do and innovate in the blockchain space, and we’re excited to work with them to reinvent how oracles and tokens can be directly connected to produce new value streams in DeFi. Being able to affect the economics of a token directly using an oracle for rebasing opens up a whole new space of tokenomics in the digital asset space. We see this as just the beginning of these types of integrations that reimagine how we integrate oracles into tokens.
“It’s exciting seeing innovation in digital assets, as we are a passionate team driven to bring a novel use case to the DeFi market that reimagines what can be done on-chain and pushes our space forward,” said Mark Sgambelluri xBTC CEO & Co-Founder. “This Chainlink integration allows us to create a brand new asset class that combines decentralized oracles and token economics directly with one another, providing new value to DeFi users and financial institutions. Rebasing tied to the data of oracles has a bright future as a standard way to develop digital assets, and Chainlink and xBTC are leading the way.”
xBTC is focused on making digital assets that are innovative and easily accessible to everyone. xBTC allows for the trading of Bitcoin Dominance on the open market. This creates a new synthetic derivative that has never existed before, giving a spot price to a novel data point that was previously not tradable in the marketplace. It is a fully open market and decentralized tracking of Bitcoin Market Cap Dominance. This synthetic derivative also introduces a new concept of a synthetic “Dominance Hedge”. A Dominance Hedge is more adaptive and responsive than a simple price hedge, instead of tracking price, it tracks how well Bitcoin keeps up with the breakneck pace of all other blockchain technologies. xBTC will have an entire ecosystem built around it starting with it’s dashboard and mint which are already launched. With the Mint liquidity providers can be rewarded for long term holding. Find out more at xbtc.fi
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 to deliver definitive truth by hundreds of organizations to provide continuous, reliable data feeds. To learn more, visit https://www.chain.link and follow @chainlink on Twitter.