Coinversation will Integrate Chainlink Price Feeds to Secure Polkadot-Based Synthetic Asset Platform
We are delighted to announce that Coinversation — a collateralized synthetic asset issuance protocol and AMM-based DEX on Polkadot — will integrate Chainlink Price Feeds as our oracle solution for accurate price data on all assets used within the protocol. By integrating Chainlink’s price reference data, we can ensure synthetic assets are issued, traded, and redeemed according to the current fair market prices. The integration will be made possible in an accelerated manner thanks to the recently released Substrate oracle pallet, which enables any Polkadot ecosystem project to easily obtain access to Chainlink Price Feeds.
Coinversation: The First Synthetic Asset Protocol on Polkadot
The Coinversation Protocol is both a synthetic asset issuance platform and a decentralized contract exchange. The synthetic assets are not real assets, but rather any asset in the real world that can be virtualized through smart contracts, and be traded via contract transactions. Coinversation’s native CTO token or DOT can be used as collateral to mint synthetic assets such as cryptocurrency, bonds, stocks, and gold. Coinversation’s decentralized contract trading solution does not require KYC, providing an open, transparent, and censorship-resistant platform for users. Additionally, our automated market maker (AMM) solution solves transaction depth and liquidity problems as no counterparty is needed to perform synthetic asset swaps.
It is known that traditional centralized exchanges have issues when it comes to security and transparency. For instance, users need to escrow their currency on the exchange when trading on a centralized exchange, whether it is a spot or a contract exchange, so heavy losses might occur If there is a stolen asset or the exchange goes away. Exchanges may also misappropriate users’ tokens for short selling to manipulate the market. Therefore, decentralized exchanges were born based on traditional centralized exchanges to solve these issues.
However, traditional decentralized exchanges also have problems. The most significant issues are transaction speed, transaction depth, and liquidity. The decentralized contract exchange included in the Coinversation Protocol is aimed to solve these problems. Users first mortgage the token CTO or Polkadot DOT to generate synthetic assets in the mortgage pool. After the synthetic assets are generated, the loan accounts for a certain proportion of the debt of the entire system, which is then used to calculate profit and loss. The advantage of this is that there is no need for a counterparty and the issue of transaction depth is solved. Also, only the tokens of the project are eligible for transaction fees. In other words, CTOs are like the shares of the entire project, and the holders of the tokens are shareholders of a company, where they can receive dividends from the transaction fees generated by the exchange. Therefore, Coinversation Protocol is a truly viable decentralized exchange with an outstanding business model.
Using Chainlink For Pricing Synthetic Assets
For smart contracts to be applied on a large scale, they have to communicate with the outside world, which in the case of DeFi is often to obtain reliable asset prices. This opens up a new challenge since blockchains are inherently disconnected from real-world data — commonly known as the oracle problem. To connect external data to blockchains, developers need to use an additional piece of middleware known as an oracle.
Oracles are critical for Coinversation to source and transmit real-time asset prices on-chain that reflect current global market conditions and are immune to data or oracle manipulation. Coinversation then references these oracle-supplied price feeds when issuing and redeeming a synthetic asset using collateral, as well as to reference when swapping assets.
After exploring various oracle solutions, we selected Chainlink’s industry-standard oracle network for all Coinversation synthetic asset markets. Chainlink Price Feeds provide ready-made oracle networks that are time-tested in production and proven to secure billions of dollars in on-chain value for leading DeFi apps. Chainlink Price Feeds are secured by decentralized orale networks that maintain prices with market coverage across all trading platforms, protecting users against various unexpected situations, such as API downtime, flash crashes, and data manipulation attacks from flash loans. Some of the key features available through Chainlink that solidified our decision include high-quality data, secure node operators, decentralized network, and its exceptional reputation.
“We look forward to integrating Chainlink Price Feeds to create a highly robust and feature-rich synthetic asset issuance and trading platform for the Polkadot ecosystem,” said Lin Chen, co-founder of Coinversation, “As the most mature oracle solution, Chainlink’s highly precise, tamper-proof, and up-to-date price data ensures Coinversation’s synthetic assets and decentralized exchange services are fair and reliable for all users.”
Coinversation Protocol is the first synthetic asset issuance protocol and decentralised contract trading exchange based on the Polkadot contract chain. It uses the token CTO issued by Coinversation Protocol and Polkadot(DOT) as collateral, and synthesizes any cryptocurrencies or stocks, bonds, gold and any other off-chain assets through smart contracts and oracles. The assets minted by all the users correspond to the liabilities of the entire system, and the proportion of each user’s liabilities has been determined at the time of forging, so that their respective profits can be calculated. Because such a collateral pool model does not require a counterparty, it perfectly solves the problems of liquidity and transaction depth in decentralised exchange(DEX).
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.