Bifrost announced on Monday, February 1 through its website that it selected Chainlink as its Oracle provider to ensure that users and dApps “take advantage of the most secure and stable prices of DeFi”.
The announcement was also shared through the social network Twitter by the Chainlink company, where it assured that “the DeFi Multichain project promoted by Bifrost uses Chainlink Price Feeds on the mainnet to value the guarantee during the issuance and settlement of loans, which guarantees that BiFi has high quality data with market coverage in all commercial environments”.
Bifrost explained that Chainlink Price Feeds provides “demonstrably safe and reliable pricing oracles backed by high-quality data,” which they believe is indispensable for BiFi’s realization of a robust multi-chain DeFi ecosystem.
The company explained that the BiFi protocol currently leverages the following Chainlink pricing sources to quote collateral during the loan issuance and settlement processes: ETH / USD, LINK / USD, USDT / USD, and DAI / USD.
What do the price oracles mean for DeFi?
Oracles are a critical infrastructure for blockchains and especially DeFi ecosystems, which require financial data to activate on-chain applications. All DeFi services, such as loans, margin trading, and derivatives, rely on oracles to obtain price data generated from off-chain sources, particularly aggregated from numerous sources.
However, the explosion of DeFi platforms in 2020 led to an increase in DeFi vulnerabilities, specifically in manipulating centralized and / or single-source pricing oracles through flash loans.
Bifrost explained through an article that, because of this avalanche of attacks of lightning loans on DeFi platforms, it could be observed how easy it can be to manipulate prices through large purchase orders and cause faulty settlements, which led them to seek and find “the safest oracle that can anticipate this price manipulation, help prevent further attacks and make our ecosystem more secure.”
Why Chainlink as Oracle BiFi Solution?
Chainlink is a decentralized oracle network that enables smart contracts to securely access and aggregate off-chain data sources. “Chainlink is the most widely adopted Oracle solution, used by major DeFi projects and large companies alike, and collectively secures more than $ 10 billion in on-chain crypto assets,” Bifrost noted. In simpler words, the company opted for Chainlink because it provides the “safest and most reliable pricing oracles on the market.” To date, BiFi assured through an article that it plans to integrate additional Chainlink pricing sources in the coming months, but nothing is confirmed yet. The new price sources would be for assets like BNB, DOT, KLAY, and BTC.