BENQI Will Use Chainlink Price Feeds Natively on Avalanche to Secure Its Protocol
BENQI is excited to announce our upcoming integration of the widely used Chainlink Price Feeds — pre-built and time-tested decentralized oracle networks that provide high-quality price data on-chain for various cryptocurrencies, foreign exchange rates, commodities, stocks, indices, and more. By being one of the initial protocols to leverage Chainlink on Avalanche, BENQI will decentralize one of the fundamental components within the protocol: the price oracle.
Chainlink Price Feeds are a critical component to securing key on-chain operations within BENQI’s algorithmic liquidity markets, particularly around supplying accurate and up-to-date price data to smart contracts when calculating lending rates and checking liquidation thresholds. Already proven to be the industry standard for decentralized price oracles, our integration with Chainlink will ensure the BENQI protocol has highly reliable and tamper-proof data feeds on all the assets offered in our lending and borrowing markets.
The initial Chainlink Price Feeds being launched include: AVAX/USD, LINK/USD, ETH/USD, wBTC/USD, USDT/USD and DAI/USD. Additionally, BENQI will leverage Chainlink in quickly and securely launching additional Price Feeds in the future to support the growth of our ecosystem.
Decentralizing BENQI’s Price Oracle Mechanism
BENQI is an algorithmic liquidity market protocol built on Avalanche. Initially launching on the Avalanche C-Chain, the BENQI protocol enables permissionless lending and borrowing of assets on a highly scalable network, empowering users to:
- Instantly supply and withdraw liquidity from a shared liquidity market, earning interest off their assets within the protocol
- Instantly borrow from a liquidity market using their supplied assets as collateral
- Have a live and transparent view of interest rates around the clock based on the asset’s market supply and demand
Since the protocol relies on the over-collateralization of assets to access loans, its price oracle represents a critical piece of infrastructure for the safety of the protocol. These price oracles determine the calculation of crucial protocol parameters such as lending rates and liquidation thresholds.
Decentralized protocols are only as strong as their weakest points, so it is imperative that our price oracles are not centralized in their source of data or method of transmission. Not only could this introduce concerns around downtime and stale price feeds, but could also lead to manipulation by the oracle itself of the data provider.
In particular when it comes to data sources, price oracles pulling data from a single or small set of low liquidity data sources makes the protocol susceptible to various exploits such as API / Exchange downtime, flash crash outliers, and data manipulation attacks like those carried out using flash loans. It’s not theoretical either as all of these situations have occurred within DeFi and caused real loss of user funds. In addressing these issues, we decided the best course of action was the integration of Chainlink with BENQI.
How Chainlink Price Feeds Secure DeFi
We selected Chainlink as the go-to oracle solution to secure all lending and borrowing markets on BENQI because it’s provably secure and reliable oracle infrastructure that already secures billions of dollars in value across leading DeFi protocols. Some of the unique features of Chainlink Price Feeds that make it the best choice to secure users’ funds include:
High-Quality Data — Chainlink Price Feeds source data from numerous premium data aggregators, leading to price data with wide market coverage that’s aggregated from hundreds of exchanges, weighted by volume, and cleaned from outliers and wash trading. This generates accurate global market prices that are resistant to data source failures or manipulation.
Secure Node Operators — Chainlink Price 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 Price 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 Price 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 DeFi projects to get premium data quality and robust oracle security for a fraction of the total cost.
Reputation — Chainlink provides a robust reputation framework and set of on-chain monitoring tools that allow users to independently verify the historical performance of node operators and oracle networks, as well as check the real-time prices being offered.
Our integration of Chainlink aligns with our vision of building open and regulatory compliant decentralized financial applications on Avalanche and future Avalanche subnets. Additionally, given the rapid growth of the Chainlink Network and its very liquid presence in the smart contract economy, LINK will be one of the first few pools open at the launch of the BENQI protocol.
“Price oracles are one of the most often overlooked yet extremely important elements within decentralized protocols. After internal research and discussions, we decided to go with the industry standard oracle network, which is already securing billions of dollars within decentralized financial applications alone. Having Chainlink secure our price feeds, we have added confidence in the security and health of our protocol.” — Hannu Kuusi, Co-Founder BENQI
We look forward to a bright future of collaborative efforts between BENQI and Chainlink, furthering our mission of building on an open, inclusive decentralized financial ecosystem.
Built on Avalanche’s highly scalable network, BENQI’s vision of bridging decentralized finance (DeFi) and institutional networks starts by launching BENQI on the Avalanche C-Chain. Through BENQI, Avalanche users will be able to earn interest on their assets, obtain credit through over-collateralized loans and earn QI governance tokens as rewards for providing liquidity on the protocol and Pangolin. For more information about BENQI, please visit: benqi.fi
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.