Avalanche-based algorithmic money market protocol BENQI integrates Chainlink Price Feeds to ensure protocol security against the notorious flash credit attacks.
BENQI integrates chain link oracles
Today, Avalanche’s C-chain-based algorithmic money-making protocol BENQI announced that it is integrating Chainlink Price Feeds to protect the protocol from flash credit attacks.
Basically, using secure and reliable oracles plays an important role in developing secure lending protocols that rely on external pricing sources to determine collateralization rates and liquidation conditions.
However, reliance on one-stop oracles carries the risk of exposing such logs to tampering and exploits that rely on Flash Loans, which is essentially an instant and unlimited loan. An attacker could target a large pool of funds to instantly change the price of a vital asset (e.g. USDT) and perform operations that would, if misconstrued, pull funds from the log.
Several well-known DeFi protocols such as Compound, Warp Finance, and others have suffered costly flash credit attacks in the past. For example, Compounds Oracle believed that DAI was valued at $ 1.4 during a November 2020 flash crash, as DAI briefly traded at that price on both Coinbase and Uniswap, the two exchanges used by Compounds Oracle. This resulted in unfair liquidations of more than $ 50 million.
However, by using Chainlink’s price feeds, BENQI can ward off potential price manipulation – both natural and artificial. The first price feeds to consume include AVAX / USD, LINK / USD, ETH / USD, wBTC / USD, USDT / USD, and DAI / USD. More are expected to be added later thanks to Chainlink’s flexible framework.
Information on Chainlink Price Feeds
For the uninitiated, Chainlink’s price feeds are aggregated from hundreds of sources and checked by Chainlink nodes to ensure that the average metric is not affected by significant outliers. The fact that Chainlink Price Feeds provide source data on all of the available liquidity in the cryptocurrency ecosystem would make it nearly impossible, or at least prohibitively expensive, to carry out a market manipulation attack on the BENQI protocol.
“Award oracles are one of the most overlooked, yet extremely important elements in decentralized protocols,” said Hannu Kuusi, co-founder of BENQI. “After internal research and discussions, we decided on the industry-standard oracle network, which already secures billions of dollars for decentralized financial applications alone. Since Chainlink secures our price feeds, we have additional confidence in the safety and health of our protocol. “
The integration of BENQI in Chainlink is in line with his vision of building open and regulatory-compliant dApps for Avalanche and future Avalanche subnets. In addition, due to the rapid growth of the Chainlink network and its very liquid presence in the broader crypto markets and smart contract economy, LINK will be one of the first pools to be opened at the start of the BENQI protocol.
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