Derify Protocol Integrates Chainlink Price Feeds To Help Secure Pricing Calculation And Trading Stability

Derivation Lab
4 min readDec 2, 2022

--

We’re excited to announce that Derify Protocol — an innovative decentralized perpetual protocol — has integrated Chainlink Price Feeds on BNB Chain mainnet. By integrating the industry-leading decentralized oracle network, Derify Protocol has access to high-quality, tamper-proof price feeds needed to help implement derivatives trading. Our smart contract receives digital asset pricing from Chainlink (index price) and uses it as the mark price, which is used to calculate the profit, loss, and liquidation price of users’ positions. At the same time, the highly accurate and reliable price data provided is used as the real-time transaction call price. In other words, mark price = index price (from Chainlink).

This will provide our users with stronger assurances that:

  1. Pricing source depends on a reputable oracle and cannot be manipulated by any external exchange or Derify itself, helping make our perpetual trading protocol safer and more reliable.
  2. Timely price data is used to help prevent malicious arbitrage bot attacks.

Our initial integration involves the use of the following Chainlink Price Feeds: BTC/BUSD, ETH/BUSD, and MATIC/BUSD trading pairs. We chose Chainlink as our go-to oracle solution because its infrastructure is seamless to integrate and time-tested in production. Chainlink already helps secure leading DeFi protocols responsible for tens of billions of dollars in smart contract value, maintaining robust security and high availability even amidst unexpected events, such as exchange downtime, flash crashes, and data manipulation attacks via flash loans.

In order to help secure trading stability — helping to protect against price manipulation — we needed access to fresh asset prices that are supplied directly on-chain in a highly reliable manner to help further prevent users’ positions from being unnecessarily liquidated. Fair market asset prices should reflect a volume-weighted average from all trading environments. Thus, we needed to make use of an oracle network to fetch aggregated price data off-chain and deliver it on-chain to be consumed by our application.

After reviewing various oracle solutions, we integrated Chainlink Price Feeds because they provide a multitude of critical features such as:

  • High-Quality Data — Chainlink Price Feeds source data from numerous premium data aggregators, leading to price data that’s aggregated from hundreds of exchanges, weighted by volume, and cleaned of outliers and wash trading. Chainlink’s data aggregation model generates more precise global market prices that are inherently resistant to inaccuracies or manipulation of any single or small set of exchanges.
  • Secure Node Operators — Chainlink Price Feeds are secured by independent, security-reviewed, and Sybil-resistant oracle nodes run by leading blockchain DevOps teams, data providers, and traditional enterprises. Chainlink nodes have a strong track record of reliability, even during high gas prices and infrastructure outages.
  • Decentralized Network — Chainlink Price Feeds are decentralized at the data source, oracle node, and oracle network levels, generating strong protections against downtime and tampering by either the data provider or oracle network.
  • Reputation System — Chainlink provides a robust reputation framework and set of on-chain monitoring tools that allow users to independently verify the historical and real-time performance of node operators and oracle networks.

In addition to the current integration of Chainlink Price Feeds on BNB Chain, as Derify protocol gets more mature and reputable, we plan to expand our services to other chains, such as Ethereum, Polygon, and Arbitrum, where we also plan to integrate Chainlink Price Feeds.

“We’re excited to integrate Chainlink Price Feeds into our decentralized perpetual protocol to help calculate mark and index prices. As we wanted the most accurate and reliable prices possible, the industry-leading Chainlink Price Feeds was the clear solution.”–Jonus, CEO of Derify Protocol

About Chainlink

Chainlink is the industry-standard Web3 services platform that has enabled trillions of dollars in transaction volume across DeFi, insurance, gaming, NFTs, and other major industries. As the leading decentralized oracle network, Chainlink enables developers to build feature-rich Web3 applications with seamless access to real-world data and off-chain computation across any blockchain and provides global enterprises with a universal gateway to all blockchains.

Learn more about Chainlink by visiting chain.link or reading the developer documentation at docs.chain.link. To discuss an integration, reach out to an expert.

About Derify Protocol
Derify is a brand-new decentralized derivatives protocol that mainly provides decentralized perpetual trading services. For better derivatives trading experience, we have innovative designs, including position mining, hAMM (hedged automated market maker), 0 slippage, 0 funding fee, and support on-chain limit orders.

hAMM is an improved version of AMM (Automated Market Maker), where the core is to balance long and short positions. Position mining is a liquidity incentive method based on hAMM, which directly motivates liquidity providers. In the Derify perpetual trading model, holding position(s) is equivalent to providing liquidity.

More importantly, we don’t take custody of users’ funds and we don’t need professional/traditional/centralized market makers because all transactions are handled on-chain. From a risk-control perspective, Derify Protocol has a closed loop of risk control through innovative mechanisms such as PCF (Position Change Fee), position limit, insurance pool, bToken (bond), etc. These risk-control mechanisms help Derify avoid the occurrence of negative margin accounts or other system risks in traditional perpetual providers.

Learn more about Derify by visiting derify.finance or reading the developer documentation at https://docs.derify.finance/about-us/master.

--

--

Derivation Lab

Founding Team of Derify protocol. Official website: derify.finance