Tranquil Finance Upgrades to Chainlink Price Feeds to Help Secure Its Lending and Borrowing Protocol
We are excited to announce the integration of Chainlink Price Feeds as Tranquil Finance’s exclusive price data solution on Harmony mainnet. The industry-leading Chainlink decentralized oracle network is now securing all of Tranquil Finance’s lending and borrowing markets to help ensure that user loans are accurately collateralized and underwater loans are liquidated according to globally accurate fair-market rates.Upgrading our oracles to use Chainlink allows the Tranquil protocol to access fresh and reliable asset prices, which is critical for promptly liquidating underwater positions.
Our initial integration involves the use of the following Chainlink Price Feeds: ONE/USD, WBTC/USD, ETH/USD, USDC/USD, USDT/USD. 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. Moreover, upgrading our oracles to Chainlink allows the Tranquil protocol to access fresh and reliable asset prices, which is critical for determining collateral ratios and promptly liquidating underwater positions.
Understanding the Importance of Oracles
An oracle is a service that makes real-world information available to smart contracts. Tranquil relies on price oracles to provide it with the price of all supported assets on the platform. These prices are used to calculate the collateral value and borrow limit for each user. If a user’s position exceeds the borrowing limit, then their position will be liquidated to protect the solvency of the protocol.
Our legacy oracle stack was based on Sushiswap TWAP oracles, which had two main drawbacks. First, the oracle returned an averaged price over 10 minutes, which lagged the actual price in extremely volatile market conditions, resulting in stale, inaccurate data. Secondly, the security of the oracle depended on the liquidity in Sushiswap, which while at sufficient levels today, is a dependency and obstacle for scaling tamper-resistance.
Why We Needed Chainlink Price Feeds
Chainlink Price Feeds are natively accessible on Harmony, meaning Tranquil can seamlessly use them whenever it requires the price of an asset in a calculation.
Compared to our legacy oracle, Chainlink’s price data provides a fresh market-wide spot price, making Tranquil more robust under volatile market conditions. Furthermore, the security and scalability of our protocol no longer depends on the liquidity in Sushiswap pools.
Some of the main reasons we integrated Chainlink Price Feeds include:
- 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.
New Collateral Factors
Due to the improvements from integrating Chainlink, the collateral factors for all markets will be increased as follows:
ONE: 40% to 65%
1WBTC: 50% to 75%
1ETH: 50% to 75%
1USDC: 60% to 80%
1USDT: 60% to 80%
“While our original oracle service was sufficient for our early operations, we realized we needed a more robust solution to help our protocol scale as we enter a new stage of growth. With Chainlink Price Feeds, Tranquil users get access to tamper-proof market data, helping bring greater assurances that their loans consistently reflect real-world asset prices,” stated Tranquil Finance Lead Developer, 0xYamcha.
Chainlink is the industry standard for building, accessing, and selling oracle services needed to power hybrid smart contracts on any blockchain. Chainlink oracle networks provide smart contracts with a way to reliably connect to any external API and leverage secure off-chain computations for enabling feature-rich applications. Chainlink currently secures tens of billions of dollars across DeFi, insurance, gaming, and other major industries, and offers global enterprises and leading data providers a universal gateway to all blockchains.
About Tranquil Finance
Tranquil Finance is an algorithmic money market protocol on the Harmony ONE blockchain. It allows users to supply and borrow assets, while receiving or paying interest in a completely permissionless and decentralized way. Borrowing and lending interest is set based on market demand, and loans are over-collateralized to ensure solvency.
This model was pioneered by the Compound protocol on Ethereum, but high gas fees have made the protocol untenable for most users. Building on Harmony ONE gives the Tranquil protocol fast and cheap transactions, democratizing access to everyone.