BoringDAO + Chainlink：A Critical Step to Make oBTC more Decentralized!
BoringDAO is excited to announce that we have integrated Chainlink Price Feeds live on mainnet to support our decentralized asset bridge platform. Starting with the BTC-USD Price Feed, these Chainlink-powered decentralized oracle networks provide secure, accurate, and reliable price data on assets bridged on BordingDAO, which enables the proper calculation of fair market minting rewards and protocol fees. Additionally, Chainlink Keepers will also serve as the future foundation for an automated clearing system to prevent under-collateralization of the BoringDAO asset bridges (“Tunnels”) during an unlikely black swan event scenario.
“After in-depth research, we have found that Chainlink is one of the safest, most reliable, and most complete oracle solution in the DeFi ecosystem. Chainlink makes BoringDAO’s minting system, rewards, and fees more accurate. Moreover, the introduction of Chainlink makes the multiple-layer protection of BoringDAO Channels more stable, as well as lays the foundation for a decentralized automated clearing mechanism. Chainlink is therefore a key step for BoringDAO in its mission to fully decentralize our asset channels now and in the future.” — — Enki, core member of BoringDAO
BoringDAO is a fully decentralized asset bridge operating as a DAO. It will bridge digital assets to any smart contract-enabled blockchain such as Ethereum. By default, it will serve as a Layer-2 solution for BTC and other non-smart contract blockchains, making assets like BTC and LTC programmable.
Using our “Tunnel Mechanism” and “Triple Pledging” features, BoringDAO enables BTC, LTC and other blockchain assets to be seamlessly represented on Ethereum and other blockchain networks, which then allows them to be used within applications on those blockchains.
BoringDAO has a three-layer security mechanism:
- Asset layer (PS2H multi-sig + OP_Return)
- Contract layer (over 100% reserve)
- Application layer (decentralized insurance such as Nsure and Cover)
These security mechanisms allow digital assets to be transferred to other blockchains in a truly secure, decentralized, and trustless way. The first oToken, oBTC, has already been integrated into many mainstream Ethereum-based DeFi protocols such as Curve, SushiSwap, Alpha Finance, etc.
Meanwhile, Mint Mining and Boring Farm works as a double incentive mechanism to further reward users who participate in the ecosystem. With the help of a decentralized multi-signature mechanism and DAO governance, BoringDAO is becoming important blockchain infrastructure for bringing Bitcoin onto the Ethereum Network and into its DeFi ecosystem, making programmable BTC a reality.
BoringDAO has three notable features:
- Triple Security Mechanism — Except for BTC mortgages, there are also contract layer mortgages and multiple insurance mechanisms.
- Decentralized — With an advanced coin-minting mechanism, oBTC minting is much faster than other cross-chain BTC assets.
- High Incentives — Our BoringFarm pool and the Curve pool all enjoy high APYs.
BoringDAO needs an accurate price oracles from Chainlink
Minting mining is one of the greatest features of BoringDAO’s Channel. The fees and costs of minting are all given back to users in the form of BOR rewards. Thus, users can obtain oBTC and BOR rewards by staking BTC. However, to calculate rewards in a secure and transparent manner, accurate prices that reflect real-time market conditions are required to ensure that users receive fair rewards without suffering losses. Alternatively, when users exit a BoringDAO Channel, they need to pay BOR, which also requires an accurate price feed.
Both of these situations of opening/closing channels necessitates the need for a price oracle, to guarantee that all parties in the BoringDAO system are receiving fair market rates. In order to make BoringDAO Channel rewards highly precise, we set strict requirements for the timeliness, accuracy, and stability of the oracle mechanism. After in-depth research, we found Chainlink to be one of the safest, most reliable, and most complete oracle solution in the market, hence why its price oracles currently secure over 7B in USD value throughout DeFi. Some key features we appreciate about Chainlink Price Feeds, which are key to BoringDAO’s success include.
- High-quality data — Leverage premium price data from off-chain data aggregators, leading to strong market coverage that’s reflective of hundreds of exchanges and weighted by volume as opposed to any single or small set of exchanges.
- Verifiable and secure nodes — Use of secure node operators that cryptographically sign on-chain each data point they broadcast, enabling users to verify the security and performance of oracle nodes and networks.
- End-to-end decentralization — Deploy a decentralized oracle network using multiple independent nodes and data sources to avoid Sybil attacks, ensure high availability, and provide tamper-proof guarantees on data sourcing and delivery.
Chainlink makes BoringDAO more decentralized
Through the integration of Chainlink Price Feeds, oBTC’s advanced minting mechanism is now more decentralized and the BOR minting rewards for users are more accurate. At the same time, Chainlink mitigates various data manipulation and downtime risks (e.g.; flash loan attacks) that may lead to inaccurate pricing of BOR and BTC during the minting process.
If the asset price is not accurate, BoringDAO’s triple security mechanism must be able to prevent the automation of liquidations in case of a black swan event, which often requires a centralized team to process. However, this does not comply with BoringDAO’s original intention — fully decentralized asset bridge.
Here is where the triple insurance mechanism of BoringDAO Asset Bridge comes into play. BoringDAO’s Channel adopts a double-layer pledging model. The first layer is a mortgage asset; for example, stake BTC and mint almost the same amount of oBTC. The reason for saying “almost” is because there is a Mint Fee charged during the process. However, BOR will be rewarded to the user at double the mint fee as part of the same process, which in essence makes minting profitable. In the process of burning, we also set a mechanism to prevent deal-hunters and collect BOR tokens as burning fees (equivalent to minting fees).
The second layer is the contract, which is also a feature of our project called Tunnel (also related to the origin of our project name). We pay our respects to Elon Musk’s Boring, wherein he builds tunnels in the real world and we build them in the virtual worlds so our collateral reserves are perfectly safe. To prevent the most extreme cases, we have an insurance mechanism where 50% of the redemption fees will enter the insurance pool. Currently, COVER & Nsure has backed BOR, both of which will protect BoringDAO and oBTC.
We plan to use Chainlink Keepers to trigger certain automated protected clearing systems, without using centralized operators. Weather through Chainlink Price Feeds, Keepers, or other future oracle functions, we believe the introduction of Chainlink will transform the BoringDao asset system into a more secure, stable, and decentralized protocol, getting us closer to the ultimate goal of “fully decentralized.”
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.
BoringDAO is a decentralized asset bridge project, run as a DAO. BoringDAO can allow any blockchain with smart contracts such as Ethereum to become a Layer2 solution for Bitcoin, making BTC, LTC, and other assets programmable. With “Tunnel Mechanism” and “Triple Pledging”, BoringDAO enables BTC, LTC and other blockchain assets to seamlessly engage in Ethereum and other blockchain networks, and enables users to seamlessly access decentralized protocols.