$100M In Crypto Loans Liquidated On Compound After ‘Bizarre’ 30% Spike In DAI Price

  • Over $100 million in loans were liquidated on Compound after a possible oracle exploits on Coinbase.
  • A further $8 million in crypto loans were liquidated on dYdX, a DeFi lending platform.

Almost $103 million in loan collateral has been liquidated on Compound Finance, a DeFi lending and borrowing platform, over the last 24 hours after a price spike on DAI stablecoin on Coinbase. According to data aggregator, LoanScan, a further $7.81 million was also liquidated on the dYdX exchange, totaling close to $110 million in DeFi loan liquidations.

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Nearly $110 million in crypto loans liquidated over the past 24 hours after a DAI suddenly spikes 30% in price (LoanScan)

The momentary DAI price spike

DAI caused massive liquidations on Compound as the price of DAI momentarily spiked by 30% on Coinbase, the lending platform’s primary price oracle. According to Alex Svanevik, CEO at Nansen, a crypto-analysis firm, the liquidations arose from an under-collateralization of Compound users’ loans. Svanevik said,

“My understanding is that the DAI price on Coinbase was driven up to a premium of around 30%. Compound’s oracle uses Coinbase for pricing data.”

Nearly 45% of the total liquidated amount on Compound arose from one wallet address, the third-largest COMP farmer, facing liquidation in a total of $46 million.

So how exactly does a DAI price spike to $1.30 cause such massive liquidations?

As a lending/borrowing platform, Compound allows users to borrow and lend multiple cryptocurrencies across the platform. Borrowers must place more significant collateral than the loan they are receiving over collateralized loans. If, at any moment, the smart contract notices the loan is under-collateralized, then it will automatically liquidate the loan and repay itself. Svanevik further explains,

“This caused liquidations as the value of the loans exceeded collateralization-ratio thresholds.”

As DAI’s value spiked, the amount of DAI loaned out increased relative to the collateral provided, leading to under-collateralized positions, hence the liquidations.

Of the total $110 million in crypto loans liquidated, $56 million was from DAI borrowers, $38 million from Ethereum (ETH) borrowers, $10 million from USDC stablecoin borrowers, and $4 million from wrapped BTC (wBTC).

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Author: Lujan Odera

Polkadot (DOT) Integrates Bluzelle’s Decentralized Data Oracles To Boost DeFi App Development

  • Bluzelle, a distributed oracle platform, announced a partnership with the blockchain research and development firm, Web3 Foundation (W3F), to integrate its decentralized data oracle on Polkadot.
  • This blockchain will offer developers the ability to build cross-chain applications.

According to a release on Medium, Bluzelle aims to bring “distributed storage capabilities” to projects building dApps on Polkadot ranging from decentralized finance dApps to gaming applications. The partnership between the two blockchain firms aims at directly taking up market share on the burgeoning DeFi apps market.

Polkadot’s founder, Gavin Wood (also the founder of W3F), said the partnership with Bluzelle would help in the quick transition of apps to the Web3 phase by leveraging the decentralized storage and trusted data oracles provided by the latter firm.

Polkadot is steadily improving cross-chain interaction between dApps in a bid to switch the web to Web3 standard entirely. In August, the Polkadot team announced the launch of its first parachain implementation testnet, Rococo, removing the need for relay chains. The Bluzelle integration will enhance development on Polkadot-based parachains by offering an architecture that “aligns with that of Polkadot” and “retains access to a reliable data network.”

Additionally, the oracles will provide DeFi projects with historical price data allowing the statistical analysis of token prices. Smart contracts rely on historical on-chain data to keep the market prices in check; hence projects using the decentralized oracles on Polkadot will be resilient to data manipulation attacks.

Bluzelle will be made available to all projects building on Polkadot’s Substrate framework.

Bluzelle is a delegated proof-of-stake (DPoS) blockchain-powered by Cosmos, claiming to handle over 10,000 transactions per second (TPS). Such infrastructure is a crucial feature to the growing DeFi market to provide scalability and cheap transaction fees – something that the current DeFi-leading platform, Ethereum, is suffering from. Pavel Bains, CEO of Bluzelle, said the consensus infrastructure would remain on Cosmos and further stating the embryonic stage of Polkadot’s integration:

“At this time, there is not anything built to show. It’s early stages. We are working with a number of DOT projects already.”

In February, BEG reported Polkadot’s integration of decentralized data oracle, Chainlink, becoming the first blockchain outside Ethereum to integrate the latter.

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Author: Lujan Odera

Chainlink Acquires Cornell’s DECO Project, to Enhance the Privacy of Data on Oracles

Chainlink, the decentralized oracle provider, has acquired Cornell University-based project DECO meant to enhance the privacy of oracles used on blockchain networks. Oracle-based data plays a critical role in maintaining the blockchain network, and with growing cases of hacks and ransomware, strengthening the accuracy, security, and privacy of the Oracle systems would eventually enhance the network of blockchain itself.

Dr. Ari Juels, one of the staff at Cornell University who was involved with the DECO project, has been hired by Chainlink as the chief scientist for the project. Jules would be responsible for overseeing the integration of DECO.

DECO was part of Cornell’s Initiative for Cryptocurrencies and Contracts, and it would help Chainlink in minimizing the privacy issues for the data that it offers for smart contracts. The integration of DECO would make Chainlink oracles more secure and private. Chainlink oracle provides an external source of data for smart contracts, which are crucial given, crypto prices change quite often.

The integration of DECO to Chainlink protocol would allow proving the origin and state of confidential data without compromising on user’s privacy. If we look at the real-world example, the integration would let the user see the info posted by a particular account, but won’t reveal any other detail about the same. Chainlink also believes DECO could be used more broadly, especially for the defi ecosystem, and make data oracles safe and secure to use for everyone.

Sergey Nazarov, a Chainlink co-founder, commented on their recent integration and said,

“DECO enables a large expansion in the quality and breadth of data that can now be made available to public blockchain systems. There are lots of private data associated with real-world collateral, like the state of an invoice, or ownership of the real estate, or some other insured asset.

DECO-enabled Chainlink oracles will be able to prove to a smart contract that the state of the asset is solvent, without disclosing private or personal ownership information onto a public blockchain.”

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Author: James W

Tezos (XTZ) Launches Delegated, Pre-Funded, Self-Sustaining Harbinger Price Oracles

Tezos has announced Harbinger — it’s very own oracle to deliver signed price feeds based on market data from multiple crypto exchanges to its network.

With Harbinger, Tezos is expecting the algorithmic stablecoins, lending platforms, and insurance products to kick off the new use cases.

Initial versions of the contracts are already deployed on mainnet and CarthageNet.

It’s not surprising that the network is delving deep into oracle as oracle projects have been having a lot of attention and gains in the crypto market. The crazy growth of Chainlink (LINK) is evidence of how much traction the decentralized off-chain data feed providers are getting.

Other popular oracles in the market are Band Protocol (BAND) and Augur (REP).

Take on the DeFi World

Now, Tezos, a liquid-proof of stake crypto network, is ready to make the most of the decentralized finance (DeFi) world through its oracle.

Oracles are critical to the fast-growing DeFi space, which has a total value locked (TVL) surpassing $7 billion, in order to have trusted price feed.

In its official announcement, Tezos announced that in Harbinger, “an account that pays for fees to update the price oracle can be delegated and pre-funded with tez,” much like staking.

This, it says, will enable the development of “self-sustaining” price oracles where the block rewards for participating in PoS consensus offset the fees required to keep the oracle data current.

“Having a reliable feed for on-chain price data is critical for DeFi lending platforms. Harbinger is an important building block for the decentralized finance ecosystem on Tezos,” said Robert Leshner, founder of Compound.

After taking inspiration from MakerDAO in StakerDAO, this latest one is based upon Compound’s Open Price Feed.

Harbinger is a set of tools and reference contracts, allowing anyone to become a ‘poster’ who retrieves prices from ‘signers,’ which are crypto exchanges to deploy a price oracle on the Tezos network, which then publishes cryptographically signed prices.

Moreover, Tezos smart contracts use callbacks to receive data to avoid reentrancy attacks.

In the meantime, the 13th largest crypto by market cap of $2.5 billion, XTZ is falling alongside the broad crypto market, trading at $3.43.

Also Read: Is the DeFi Craze Killing Tezos? XTZ’s Main Selling Point “Staking” Is Losing Appeal

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Author: AnTy

Banking Sector Bleeds in 2020 While DeFi Records 900% Growth

In 2020, we saw the Oracle of Omaha, Warren Buffett selling all his positions in banks that included; Goldman Sachs, JPMorgan Chase, Wells Fargo, and others.

Given that the banking sector of Dow Jones, Nasdaq, and S&P 500, all three remain under losses, negative 35% returns YTD, it makes sense that even Buffett has jumped the ship.

In the current environment of ultra-low interest rates, banks are struggling to remain profitable.

But while centralized financing is suffering, Decentralized Finance (DeFi) has emerged in the crypto market as the latest craze which is seeing explosive growth.

The DeFi Boom

On January 1st, 2020, the total value locked in the DeFi sector was $680.9 million, which has now grown to $6.67 billion in just eight months.

The total market capitalization of the top 100 DeFi coins is close to touching $14 billion, as per CoinGecko. The biggest gainers of this sector this year include LEND (6,280%), REN (1,300%), KNC (835%), YFI (789%), LINK (650%), and SNX (480%).

The blockchain underpinning majority of the DeFi development, Ethereum is also up 209% YTD. Also, a record 4.6 million Ether are locked in these DeFi protocols along with 47.8k BTC.

“From a portfolio standpoint I want to be long the asset that is driving the market with real demand. ETH is a newer trade than the traditional trade of BTC vs central banks printing money,” said trader CryptoISO.

“Rocket Fuel” for DeFi Growth

The DeFi sector is seeing a new wave of financial experiments which is tokenizing everything from money, debt, mortgages, to insurance.

As Asheesh Birla, SVP of Product at Ripple notes, “We’re seeing a melding of the old world and new. It’s only a matter of time before banks offer custody services, acquire companies with those capabilities, and potentially even offer crypto lending as they see consumer interest in DeFi.”

Decentralized exchanges, with no central operator, in the crypto world, are already giving centralized exchanges a run for their money. Fiat-backed stablecoins have been providing the fiat on and off-ramps while enabling global consumers to access the USD without a bank account through the likes of Tether (USDT).

But within this sector, a new wave of Yield Farming is what is taking DeFi world by storm. It is basically serving as “rocket fuel” for the current growth cycle in DeFi, states Delphi Digital in its latest report.

Yield farming is generating the most returns on your crypto assets, and since people started chasing high yields, many ‘experiment” projects have cropped up in this really short period. It started with Compound and only grew from there to the likes of Yearn.Finance (YFI), Balancer, YAM.Finance, the Curve-Ren-Synthetix mix, and so much more.

But Not Without the Risks

As we reported, the skyrocketing Ethereum transaction fees are pricing out smaller layers and making DeFi increasingly a game of whales.

Another big question is: Are these governance DeFi tokens, that are at the heart of DeFi’s explosive growth, really that decentralized? According to the Token Daily report, the distribution of these tokens might not be that different from the ownership structure of JP Morgan or Bank of America.

For starters, the investors of these DeFi projects control a “disproportionately large amount of votes,” such as more than 13% of the voting power for Compound is controlled by the top 10 addresses.

Also, “In yield farming, funds and wealthy investors, aka whales, are maximizing their benefit/share of governance tokens using recursive provisioning of liquidity. This ultimately leads to a concentration of these tokens into the hands of a few players/farmers.”

Although with liquidity mining as with Yearn.Finance, a new dynamic of money distribution is being added; large gatekeepers still have a big influence on the protocol, which could be even more concentrated than the centralized options.

Moreover, all this craziness will inevitably invite “difficult legal questions and regulatory scrutiny,” said Jason Somensatto, senior counsel at 0x Labs. But in the end, he hopes, it will leave a “healthier ecosystem.”

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Author: AnTy

Nervos Network Integrates Chainlink’s Decentralized Oracles To Enhance Smart Contract Development

  • Nervos Network is the latest blockchain project to integrate Chainlink’s decentralized oracle system to enhance the data quality and enable more data-rich decentralized apps (DApps) to build onto the network.

In a published blog post on Medium, the Nervos Network announced its integration with Chainlink to utilize the latter’s decentralized data oracles. Chainlink provides a distributed feed of independent node operators that allow blockchains to pull data from trusted third-party data feeds.

Blockchain collect data form themselves and do not provide native access to these external data feeds. Decentralized oracles offer blockchains this access allowing them to collect data and ease the execution of smart contracts. With the integration of Chainlink, the developers on Nervos unlock a new layer tech to the platform allowing the creation of DeFi, insurance products, investment products, and gaming products, etc. Speaking on Chainlink-Nervos integration, Chainlink’s founder, Sergey Nazarov said:

“We’re excited to help integrate Chainlink’s secure and reliable oracles into Nervos […] By making off-chain data resources available on-chain, Nervos can now offer more value to both its developers and users, leading to additional use cases in DeFi, Gaming, Insurance, and more.”

Chainlink has seen rapid growth due to its reliability and secure properties in the past few months. The blockchain offers a wide range of decentralized node operators and oracle data feeds and external adapters “that can be written in any programming language to give the oracle read/write capabilities with any API.”

The co-founder of Nervos, Terry Tai, aims at a fully decentralized platform powered by fair and unbiased information from random oracle feeds. With Nervos planning to provide a platform to build executable and data-enabled smart contracts, the integration of real-world data on the blockchain is essential, Tai said,

“We’re excited to see a plethora of new products built on Nervos using real-world data and off-chain connectivity.”

Chainlink’s utility value has seen the crypto spike into all-times growing to hold 4% of the total crypto market capitalization. According to Coingecko charts, LINK is currently trading at $18.90, representing a 135% increase in the past 30 days to place 5th on the market cap listings.

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Author: Lujan Odera

AVA Labs Integrates Chainlink’s Decentralized Oracles to Improve DeFi Dapps Development

AVA blockchain, becomes the latest platform to add Chainlink, a decentralized oracle system to its platform. The integration of Chainlink to the Dapp blockchain platform will reduce the development time and allow the creation of new products on the platform such as crypto derivatives, calculation of strike prices and triggering liquidations.

In an official report released on Medium AVA Labs, the development team behind AVA blockchain, will integrate Chainlink’s decentralized oracle system on the blockchain. AVA is a platform that enables developers to create decentralized financial applications on the blockchain.

Chainlink’s multiple sources of data oracles will prevent single point of failure (SPOF) attacks in price data retrieval. Moreover, it reduces the overall development time needed on the DApps, as well as allowing tokenized traditional assets & derivative instruments and expanding the toolkit available to devs. In an official statement to BEG, Emin Gün Sirer, CEO and Co-founder of AVA Labs, said,

“A core design principle for us is to make it dead simple for developers to build without limits on the AVA network, and that means integrating with best-in-class tech that is secure, reliable, and trusted. Any decentralized finance application on Ethereum that uses those tools and Chainlink data will soon be able to dramatically increase the velocity and volume of transactions, while also providing a far superior user experience.”

Chainlink has gained quite a repertoire over the last few months with multiple open finance platforms, exchanges and even other price oracles integrating the system. Several smart contract developers lead the security of the oracle systems on ‘Sybil-resistant’ node operators that source data from premium and trusted data centers. The increased demand in Chainlink has seen the overall number of nodes increase and the fees spiking by 1% as consumption of gas increased in the past month.

Speaking on the latest integration, Sergey Nazarov, Co-founder of Chainlink, showed his excitement in partnering with AVA. He further said,

“Due to the scalability of AVA’s subnets, developers can expect to have large amounts of data available to them for the creation of various DeFi Dapps.”

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Author: Lujan Odera

Digitex Futures Exchange Becomes First Centralized Platform To Integrate Chainlink’s Price Oracles

  • Bitcoin (BTC) futures exchange, Digitex, announces its planned integration of Chainlink’s decentralized oracle system on its centralized exchange.
  • The integration of Chainlink becomes the first-ever integration of its kind on a centralized crypto futures exchange.

In an official press release on Monday, May 25, 2020, Seychelles-based Bitcoin futures exchange, Digitex, announced the integration of Chainlink’s decentralized price reference oracles in a bid to improve and support its internal index to prevent slippage on the platform. Chainlink’s integration on the futures exchange makes it the first centralized exchange to harness the power of the decentralized oracles.

Open finance platforms are the main users for the decentralized oracle system using Chainlink to match prices, recently SmartPy, a blockchain firm, announced the integration of the platform on Tezos. The tamperproof and reliable Chainlink price oracles will offer a back up to the Digitex crypto index in case the prices are too volatile from the average global price.

The price oracles will first be integrated into the BTC perpetual futures against the dollar (BTCperp/USD) and add more pairs’ price feeds in the future. Speaking on the Chainlink’s integration, Digitex CEO, Adam Todd said,

“Chainlink provides Digitex with highly reliable and transparent price feeds that protect our users against the negative outcomes of abnormal market conditions or internal complications.

Using Chainlink price data enables us to deliver stronger security and performance guarantees to our users, furthering our vision to revolutionize futures trading.”

Chainlink is a blockchain-based data oracle that allows users smart contracts to securely and transparently connect to off-chain data in real-time. Recently, the internet giant, Kakao blockchain project, Klaytn, announced the integration of the decentralized oracle to sync their smart contracts with external API’s and payment systems. They also launched Verifiable Random Function (VRF) earlier in May.

Chainlink’s LINK token currently trades at $3.88, representing a slight percentage gain over the past 24 hours.

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Author: Lujan Odera

SmartPy, Cryptonomic Devs Bring Chainlink Pricing Oracles to Tezos Blockchain

Blockchain based oracle, Chainlink partners with independent Tezos developers to bring decentralized data solutions to the decentralized staking platform.

In an official announcement, a pair of Tezos developers will be working with Chainlink to bring decentralized oracle solutions to the staking platform. Smart Chain Arena and Cryptonomic are part of the wider Tezos development community aiming to increase Tezos blockchain adoption. The partnership will allow SCA and Cryptonomic to receive live aggregated data feeds from multiple sources enabling the development of better platforms.

“Oracles are like a big onion … [T]he more you dig into them the more layers of problems you discover.” – Chainlink CEO on partnership with Tezos. “The depth of the problem initially isn’t obvious.”

Smart Chain Arena launched the SmartPy language which will provide the bridge –through smart contracts –to deploy Chainlink’s decentralized oracles. Cryptonomic stack will support deployment, indexing and querying.

Several blockchain platforms have turned to Chainlink to offer reliable data as the various external data sources are a barrier to development. Speaking on the integration of Chainlink’s oracles, Cryptonomic co-founder Vishakh said,

“We recommend Tezos developers use Chainlink when building smart contracts as Chainlink’s secure decentralized oracle network makes possible a plethora of new use cases across DeFi, Equities, Insurance, and much more.”

The partnership project will be fully funded by the Tezos Foundation through a grant in order to allow the quick completion of the project. The Foundation has been an important pillar in Tezos development offering universities and crypto developers several grants to improve the Tezos ecosystem.

Sergey believes Tezos will use the decentralized oracles in decentralized finance and insurance as its DeFi space grows. He further said,

“And having a good oracle mechanism is basically now a prerequisite for having a well-functioning DeFi application. And I think people are starting to realize that building oracle mechanisms is akin to building a blockchain.”

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Author: Lujan Odera

Top-Performing Digital Asset ChainLink (LINK) See 64% Gains In The Last Thirty Days

ChainLink (LINK), the token for a decentralized oracle service, has broken out into a renewed uptrend, gaining 64.2 percent in the last thirty days. This breakout was in spite of bitcoin’s modest gains of just 16.4 percent over the same period.

ChainLink (LINK) Gains 64 Percent In The Last Thirty Days

The biggest increase for the cryptocurrency occurred on April 16, gaining 11 percent right after the bears pushed the price below its first support level at $3.45.

The rally put the coin into a renewed upwards trajectory, confirmed by its long-term moving averages. ChainLink broke above its 100-day and 200-day simple moving averages on April 6, which then turned them into additional support levels. Prices bounced off these zones on April 11.

There are two factors that could influence ChainLink’s price moving forward. The Relative Strength Index (RSI) could peak into overbought territory, which may leave bulls feeling uneasy about placing further bids. At present, the RSI is already very close to being overbought, so in the short-term, we could expect to see a horizontal trading movement to balance the cryptocurrency’s quick ascent.

The second factor is the coin’s contracting trading volume which signals indecision from the market. At the same time, bitcoin has also suffered from liquidity issues as part of its recovery from the March 12 market crash. Traders could, therefore, have a reduced appetite for entering risky positions during the ongoing coronavirus pandemic as safe havens such as gold continue to make higher highs.

For ChainLink, a declining trading volume sets the coin up for a strong price movement that could occur in either direction. The lower the volume becomes, the more sensitive the price is to sudden changes. Given that the trend has been upwardly stable for the last several weeks, it’s likely that we could see another sharp rally that could consolidate the gains it has made since the end of March.

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Author: Matthew North