Chainlink has been the hottest project in the blockchain space. From its massive price run to being bought by Barstool Sports Dave Portnoy, there is always an angle to explore. A couple of projects have recently begun to integrate Chainlink’s Price Reference Data for accurate coin and token prices. This may not seem like the most exciting development, but rest assured, it is a foundational move and a real use case for the platform.
Recent Examples of Use Cases and Partnerships
While Chainlink is not built explicitly for DeFi platforms, its oracle technology is an appropriate application. For those new to blockchain, Chainlink’s value proposition is a cross-chain data exchange platform. In layman’s terms, it allows external events to trigger smart contracts on the blockchain. This functionality could trigger insurance payments, coordinate payroll, and execute other actions that require the security of a censorship-resistant blockchain.
This functionality is still being built out, but the platform is slowly being used for a select “real world” uses. The price reference data is one service utilized by a number of companies. Two companies we have highlighted in the past, DeFiPie and LCX, have recently announced they will be using this service.
Price Reference Data (PRD)
But what is “Price Reference Data,” and why is it important? For LXC, this price data is daily, creating an average from several exchanges. This normalized price will be shared with participating exchanges and other DeFi platforms, including DeFiPie.
DeFiPie users will have the option to execute loans based on specific price data, which is fed by Chainlink. Since many loans will be affected by these prices, using a reliable tamper-proof provider is necessary. From their Medium article, DeFiPie lays out the advantages:
- Accurate price data sourced from multiple high quality off-chain data aggregators, which provide volume adjusted market coverage across all trading environments — no single source of truth.
- High availability and tamper-resistant data delivery via its decentralized node network architecture made up of Sybil resistant node operators run by leading blockchain DeVops and security teams — no single point of failure.
- Proven price oracles that are live on mainnet and currently secure over $1.5+ billion in USD value for many top DeFi applications like Synthetix and Aave — proven success in-production.
- Transparent on-chain visualizations that allow any user to independently monitor the price data on the network such as the current price, the nodes providing data to the oracle, the update frequency, and more — transparent price feeds.
Another company tapping into this functionality is dYdX, though they are only using the LINK-USD data. This specific pairing will be to determine the exchange’s on-chain liquidations. Chainlink was chosen in particular as the price reference data is useful when dealing with more thinly-traded order markets. SXP is doing something similar, except they are creating an SXP-USD pairing oracle on the Ethereum network.
Finally, the Geeq blockchain has also signaled plans to integrate Chainlink’s Price Reference Data. Geeq is in a unique position as it is creating a new ambitious blockchain. Being able to use established technology instead of reinventing it is a smart move and a useful delegation of resources.
The blockchain industry is quickly adopting this technology. Below is a small list of other projects using Chainlink’s Price Reference Data.
The availability of this price data will allow developers to monitor networks using this data. Exchanges or other financial institutions may use this to create or power their DeFi products. Chainlink’s scalability and robustness of its back-end oracle network will no doubt be tested as other companies opt-in to the service. Chainlink is rapidly becoming the “go-to” service when it comes to DeFi platforms. The ease of integration has been a driving force in LINK’s dramatic rise in price, placing it in 5th place on CoinMarketCap.
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