Chainlink – The First Mainstream Decentralized Oracle
Chainlink is quickly becoming a household name in the DeFi sector and is poised to continue to make significant growth this year, positioning itself to be the most popular and successful decentralized oracle in existence.
If there is one company that intends to bring interoperability in the blockchain ecosystem, then it is Chainlink, and it without a doubt has the first-mover advantage. Chainlink finds its foundational lineage in what we call Smart Contracts and was established in the year 2014. The people behind this revolutionary blockchain company are:
- CEO – Sergey Nazarov who also co-founded the company. He has a wide experience in blockchain and is credited to be one of the founding members of Secure Asset management.
- CTO- Steve Ellis also the co-founder also has been a part of the Secure Asset exchange platform.
- Other noted personalities who own a prominent position in the company are Ari Juels and Andrew Miller.
The ICO of Chainlink launched the LINK token in 2017, September. Out of the one billion tokens, 35% were available to users in the ICO.
What is Chainlink?
Some of the most prominent blockchain networks have always operated in isolation like Bitcoin, Ethereum, and others. Understandably there was no way that they could be connected. But interoperability aids users and developers to get their entryway to real-time data that exists outside the blockchain. We are all aware it was Bitcoin that introduced the concept of blockchain and decentralization. This was followed by Ethereum which explored its true meaning with smart contracts. Chainlink as the name itself suggests is the next step intending to revolutionize the blockchain industry by enabling smoother interaction with external data sources.
The Chainlink Solution
Different blockchains have different consensus mechanisms that restrict the free interaction between these chains. Chainlink solves this major concern by using a secure Oracle network for creating a decentralized solution. Never before has a blockchain project raised this issue and Chainlink happens to be the first of its kind. Its decentralized Oracle service is conjectured on Ethereum to make smart contracts more accessible and connected in general. Smart Contract was first introduced by Ethereum but it could only manage data on the blockchain. It did not allow us to create a connection with the real world. Chainlink helps in decentralizing the internet between blockchain and real-world applications.
Chainlink is a decentralized network of ChainLink nodes. Every node gives away the use of data feeds and APIs directly to the smart contract. The Chainlink network can be divided into two sections namely on-chain and off-chain that interact with each other to execute contracts. Smart contracts are devised on-chain but off-chain verify external data and send it back to on-chain.
Oracles also have a reputation system and singular identities that are its biggest proof of reliability. The network is built in a manner that calls for regular upgrades implying that different components in the network can be modified with technology trends. The users also can become node operators by connecting their API to Chainlink. The number of node operators has ever since increased.
Data can be retrieved from off-chain APIs and data pools which later can be incorporated into the blockchain with the use of oracles. Users can send their payments directly from their smart contracts to their bank accounts.
The role of Chainlink Smart contracts
Smart contracts are programs that offer trustless execution and believe in enabling frictionless transactions. Chainlink’s smart contracts include the working of oracles into contracts. These smart contracts provide decentralized oracle-feed to fulfill the conditions of the smart contract initially off-chain which later get converted into on-chain data. The differentiating factor is that it is an incentive-driven system that pools the gaps between real-world and blockchain peers.
Let’s talk about Oracles
Oracles are programs that are used to both retrieve and verify external data on blockchain networks and smart contracts.
How? With the use of market data feeds and web APIs.
For optimizing the use of Oracle, a data source is queried for distinct information that is connected back to a blockchain. Smart Contracts can be generated at this juncture to work on the necessitated information that flows from the data feed.
Chainlink is a decentralized oracle network that is open to anyone who is willing to participate in running an oracle. Every single Oracle is provided with an on-chain identity with a reputation that strengthens its reliability. Every single node in the network will have to stake LINK tokens which can be surrendered citing bad data. Due to this the network operates liberally discouraging bad data while maintaining the decentralized architecture.
How it prevents single Oracle vulnerabilities
It currently cuts down such vulnerabilities with three approaches. Data sent via the network is verified through majority voting preventing a single point of failure in the oracle system. It also issues a reputation and certification system for oracle performance. The hardware components protect the confidentiality of data so that private data can be easily transferred between oracles and smart contracts without any ado. Distribution of LINK tokens whenever bad data is spotted also is one of the ways to reduce such weaknesses.
Chainlink launched its mainnet on the Ethereum network just last summer. LINK tokens are native to Chainlink used to incentivize the entire network. Furthermore LINK tokens serve as payment currency for Node operators also postulating as an asset on different exchanges. The value as well as the use of the token is set on the notion of adoption of the Chainlink network. The total supply of LINK tokens is a finite 1 billion, with only 381 million currently in circulation.
This scarcity eventually adds value to the token with the passage of time, as demand for the LINK tokens increases. The company currently owns 30% of the token for continuous development. 35% of the one billion tokens were dedicated to the ICO, and the remaining 35% tokens were dedicated to incentivizing the network in the form of Node Operator payments. To this day in terms of ROI, Chainlink has been one of the most successful ICOs in the history of DeFi.
Major uses of Chainlink
- In the case of an insurable event, data from external sources are used. Devices enabled by the Internet of Things expel data feeds that can be used to define insurable events. Their use case for insurable smart contracts is unquestionable.
- Chainlink project can also be effectively used for bonds and smart contracts that are based on interest rate derivatives. Data from financial websites are accessed and require APIs to conclude reporting on the prevalent market prices.
- They also can be used for completing contractual obligations. Data in these contracts can be given through GPS or ERP systems so as to ensure everything fits perfectly.
| Use-case of Smart contracts for financial cases|
With the help of Smart contracts, trust can be renewed again within the financial sector and its markets. It evaporates any risk associated with counterparties in international trade.
Risky financial products like derivatives can easily be decentralized and automated without the need for any intermediaries. Chainlink’s partnership with the SWIFT banking system has been regarded as one of the most path-breaking concepts. Smart Contract developed a Proof of Concept for SWIFT with the help of Chainlink. This concept was lauded for its ability to automate bond coupon payments. It successfully demonstrated the PoC at the SWIFT Sibos Conference in 2017 where it easily showed off-chain interest rate data from 5 different banks. It also generated an ISO2022 SWIFT message to complete the payment.
Recent Chainlink Data
The Link market cap is valued presently at $1.64 billion with a circulating token supply of 381,009,558 tokens. The present spot price also stands valued 22% below the highest point it achieved this year.
From the network’s perspective, the volumes of on-chain transactions per day and the transaction value seem to be inversely related as per the chart above. This year the average transactions per day touched it’s all-time high of 7,600. Since February the average transaction values have hovered between US$1,500 to US$4,500.
What will the future hold for Chainlink?
Looking at the strong background of the company’s founders and advisors, the major partnerships, and the increasing integrations, Chainlink is undoubtedly making waves across the DeFi sector. Every day there is more and more adoption of Chainlink. Just yesterday, Kyber Network, the decentralized exchange, announced they would be integrating Chainlink for their price feeds.
Just as Bitcoin was the first mainstream decentralized currency and Ethereum was the first mainstream decentralized smart contract platform, Chainlink is the first mainstream decentralized oracle.
2020 could very well be Chainlink’s best year yet.
Check back in at DeFiRev.com to find out the latest on Chainlink.
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Huobi top official arrest – Are these rumors or a reality?
CryptoQuant, a crypto information provider, has indicated a significant increase in Bitcoin funds outflows from Huobi global. This is a development that comes when the firm has issued in public denial about rumors of an arrest of one of its executives. But as per the Chinese media, crypto exchange Huobi Chief Operating Officer (COO) Robin Zhu was under investigation by the Chinese people.
In a tweet thread that was posted on November 2, Huobi quashed rumors about the supposed arrest of a Huobi senior executive. It came out with the clarification stating:
“All of Huobi’s management team members have been accounted for and have not been detained or arrested,” the firm said. “We understand that the spread of false information can lead to concerns about the safety of user assets, but please rest assured your assets are safe.”
CryptoQuant mentions that the outflow increase peaked after midday on Monday.
Huobi is a global exchange with monthly trading volumes above $170 billion. It has assured its users and the media that nothing such as this has happened. It so happened that Huobi COO Zhu Jiawei was reportedly unreachable on Monday evening and immediately after that rumors were afloat in the circles that he was being arrested. All of the social media was swirling with the news with local news channels also reporting on the rumors.
The exchange said that Zhu was on a flight returning from a conference in Guizhou and that he would be attending a meeting in Beijing on Tuesday morning.
But, the assurances of Huobi haven’t stopped users from withdrawing funds and now they are viewing themselves in the same boat as users of OKEx. In fact, many hours before it directly addressed the rumors of an arrest, Huobi tweeted that it uses a multi-signature process for withdrawals so that the users did not have to rely on a single key holder. As for the rumors, the exchange claimed that Zhu was on a business trip and would be here this week for an important meeting. Huobi said that its operations were unaffected by these unsubstantiated rumors as per an earlier statement on its Chinese website.
Bitcoin removed from Huobi rapidly
A greater likelihood is that the rumors are false but users are not taking any chances. As said earlier, there is a mass exodus of Bitcoin with its outflows hitting 4,241 BTC which is growing rapidly.
“Looking at Huobi Netflow, BTC outflow has soared in the last eight hours.”
In the month of June, there were rumors that Dong Zhao, the co-founder of the Chinese crypto lending platform Renrenbit apparently cooperating with the police for investigations which is now a new trend in the Chinese markets. OKEx announced in October that the founder Star Xu also has been under investigation for weeks, and following that OKEx had suspended withdrawals of crypto assets from the platform. The statement came out at least one week after he was detained by the police and users are still not able to withdraw their funds.
Huobi Token price today is $3.58 with a 24-hour trading volume of $257,890,383. HT price is down -6.6% in the last 24 hours as per CoinGecko.
Rumor or reality?
Huobi is surely the largest target for Chinese authorities and watchdogs cracking down on crypto exchanges, and all this has added to the jitters of the crypto investors. As of now, there has been no evidence proving that the COO had been arrested and the company has plainly denied allegations. But nonetheless, the markets reacted.
But as far as evidence and other events surrounding it happened, the rumors have been baseless. The Bitcoin and crypto trading platform also confronted these claims in a tweet thread stating that they could share it with strong confidence that they are false. The exchange further stated that they have accounted for all of their executive team members and reassured users that all their assets are safe.
“All of Huobi’s management team members have been accounted for and have not been detained or arrested. We understand that the spread of false information can lead to concerns about the safety of user assets, but please rest assured your assets are safe.”
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Harvest Finance Hack Explained. Here’s how it happened.
Unscrambling the Harvest Finance hack and its aftermath
Harvest Finance, the Decentralized finance protocol was hacked for a staggering $24 million. The attack was a reminder to the crypto community that DeFi has sure risen to prominence but it has its own share of loopholes, and it is this that the attackers take advantage of.
Harvest Finance attack details
The attacker directly attacks the protocol’s liquidity pools leading the arbitrage attack using a large flash loan – a type of uncollateralized loan. The attacker later returned $2.5 million but in a mere seven-minute act, the entire hack was complete, leaving the protocol stakeholders bewildered.
In further addition to the details of the hack, the protocol revealed that the hacker manipulated prices on one money lego which is the Curve Y pool. This was done to drain another money lego farm USDT (fUSDT), farm USDC(fUSDC) multiple times.
The attacker then converted the funds to renBTC and later excited to Bitcoin. renBTC is not synthetic because it does not rely on any liquidation mechanism and it is certainly not the price of Bitcoin on Ethereum. It is a one-to-one representation of Bitcoin on Ethereum which can be redeemed for BTC at any time and in any amount.
The native token of Harvest Finance, FARM fell 54% to $101.79 when the news of the hack came forward. Following the attack, the amount of money that was locked in the protocol plummeted from $1 billion to $575 Million On October 25th. The investors were so fretful that they pulled their deposits back.
Harvest Finance acted accordingly and withdrew all the funds from the shared pools almost immediately after it had completed a fine evaluation of the attack. It began with reconstructing the processes which included DAI, USDC, USDT, TUSD as well as WBTC and renBTC. The funds are currently present in the vaults safely so that they are not exposed to further market manipulation. The hack did not involve DAI, TUSD, WBTC, and renBTC, and the depositors in these vaults were not affected.
How was the hack carried out?
The mechanics of the protocol has allowed for the execution of such an attack. Let us see how:
The investment strategies used by Harvest involves calculating the real-time value of assets that are invested in the base real-time protocols. The value of the assets is then used by the vaults to calculate the number of shares to be used to the user depositing the funds. The same value of the assets is also used when the users take out funds from the vaults.
Payout is then calculated upon the user exit. What also needs to be noticed here is that the assets inside some of the vaults are deposited into shared pools of underlying DeFi protocols. These are subject to market effects such as impermanent loss, arbitrage, and slippage. This means that its value can be manipulated through larger volumes of market trades.
The attacker knew this well and had exploited the impact of the impermanent loss of USDC and USDT inside the Y Pool of Curve.fi by manipulating the asset value to deposit funds into the vaults and obtain the shares for a beneficial price.
The aftermath of the Harvest Finance Hack
Harvest Finance’s Twitter account has been buzzing with messages and activity. The protocol has taken full responsibility for the engineering attack and has ensured that in the future such attacks will be countered and mitigated. The protocol has made it clear that formatting a disaster management plan to assist those who are affected will be the top priority for the protocol.
The protocol is investing its resources to catch hold of the scammers and has already provided a list of Bitcoin addresses of the hacker where it believes that the stolen funds may have moved. It also had taken immediate action by asking prominent exchanges like Binance, Coinbase, and Huobi to block the attacker’s addresses. It further said that there is:
“A significant amount of personally identifiable information on the attacker, who is well-known in the crypto community.” Not willing to dox the cyber-thief, Harvest Finance is now offering a $100,000 bounty “for the first person or team to reach out to the attacker”.
Harvest further tweeted that the $2.5 million returned by the hacker will be distributed to the affected depositors on a pro-rata basis using a snapshot. The attack on Harvest comes only six weeks after the attacker escaped with $8.1 million in Bitcoin from another DeFi protocol BZX, however, BZX managed to recover the funds.
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MetaMask Swap : Here’s What you Need to Know
MetaMask Swap :New feature Token Swap pitched for best trading experience in DeFi
MetaMask Swap has now officially launched. Metamask is a broswer extension and the most popular and used wallet and gateway for Ethereum. Metamask rose to great prominence this year with the ascension of Uniswap.
Now ConsenSys has recently made a big announcement – a new feature it has added in its kitty which is stated to resolve ancient issues of crypto wallets. The MetaMask Swap feature introduced by the giant aims to compare as well as swap tokens directly within MetaMask.
MetaMask has grown from strength to strength and has emerged as a wallet trusted by millions. It now has more than one million active users of its wallet services and is trusted by them to securely store their digital assets. It also is touted to offer a diverse variety of tokens at the best princess across DeFi.
Known to provide bespoke software solutions for the Decentralized Finance markets, ConsenSys, has established its foothold as the leading Ethereum Software company.
Let’s explore it in detail.
MetaMask Swap: Best Features
- The new token swaps feature will fetch quotes across several decentralized liquidity sources so that the users can get what they want at the best possible price.
- Earlier MetaMask navigation was complex and tricky. The user had to go through many decentralized exchanges or aggregators which offer a different set of tokens at different prices. In addition, every token had to be approved for trading adding to the woes. But the new token swap feature offers a platform that has an intuitively integrated user experience and streamlines all available liquidity.
- The novel platform also aims to bring in greater transparency and efficiency resulting in a better network experience.
- The feature will be initially available to users of the MetaMask extension on the Firefox browser. The concern plans to come up with versions for other browsers as well as MetaMask Mobile.
Benefits of using MetaMask Swap
Token Swap has several benefits in the offering because it has taken into account everything that worked against MetaMask in the past. Some of the most discernible benefits are:
MetaMask Swap Offers more liquidity mining
Every aggregator will interact with different liquidity sources that hold a certain amount of liquidity. By getting orders from many aggregators like Uniswap, Airswap, 1inch.exchange, Kyber, and the likes it will have access to the maximum liquidity across the DeFi ecosystem.
Best prices and tokens
Decentralized Exchange aggregators in the sector employ different trading strategies. This explains why the assets are priced differently.
But the users of the MetaMask wallet under the new feature can request prices from all the available aggregators and individual market makers. MetaMask will then ensure that every user gets what they want – the best prices across DeFi. Getting orders from different aggregators also ensures that MetaMask user is able to access all the top available tokens in DeFi.
MetaMask Swap has a great User Experience
To ensure the user doesn’t drive away user-experience is the key. Earlier the entire wallet system was a conundrum of confusion and excessive complexity. But, MetaMask has understood that this could be a problem for them as it could drive away users. Hence it has streamlined its approval process so much so that the users will now be able to access liquidity directly from the MetaMask User Interface. Previously they were required to navigate each DEX separately but this is a more combined and integrated approach that will simplify the entire process.
MetaMask Swap has Lower Gas Fees
Every single DeFi aggregator pushes to its etched out path to get the best trade. Every route it chooses has a different gas fee to ensure the transaction takes place. MetaMask through its token swap feature will get the best prices for the user. It also will get them the best aggregator which is most gas-efficient for a trade-in question.
MetaMask Swap has Fewer approvals
Earlier the users had to get the due approval for every token on multiple aggregators. This means that several user interfaces for every approval process but with MetaMask’s token swap users need to take approval only once. This directly converts into reduced gas costs and a much lighter approval process.
MetaMask has registered impressive growth figures. Just a few days ago, the noted platform surpassed the figure of a million active users of the wallet services.
With the token swap, MetaMask has excelled itself by removing several issues that barred the user from a good experience. By provisioning an optimized trade path, it has reduced complexities leading to better DeFi adoption.