Deerfi, a decentralized lending protocol for Uniswap for liquidity providers, has integrated Chainlink Price Feeds to provide accurate pricing data for Uniswap LP tokens used as collateral for loans on its platform.
Deerfi announced the news in a blog post on Wednesday, December 30. Deerfi is a lending protocol for Uniswap liquidity providers, where they can use Uniswap LP tokens as collateral to get loans to provide more liquidity on Uniswap.
If a user deposits USDC-USDT to Uniswap, he receives USDC-USDT LP tokens. He can then deposit USDC-USDT Uniswap LP tokens into Deerfi as a means of borrowing more USDC and USDT to provide extra liquidity on Uniswap. As long as Uniswap’s liquidity earning rate is higher than the borrowing interest in Deerfi, users can receive more income than before. Furthermore, users can also collateralize LP tokens to ETH and USDC to participate in the Uniswap liquidity mining program for earning UNI.
Deerfi has integrated Chainlink price oracles to provide accurate pricing data for Uniswap LP tokens. According to the protocol, the current pricing for LP tokens is coming directly from Uniswap but that is not “reliable and subject to Flash Loan attacks.” If such an attack happens, collateral that relies on that Uniswap liquidity pool’s price as an oracle could be subject to faulty liquidations. The protocol has integrated Chainlink price feeds due to their ability to mitigate against such data manipulation attacks.
According to the announcement, the initial integration includes ETH-denominated price feeds for 11 different assets, including ETH, BTC, USDC, USDT, and UNI. Deerfi said:
“These Chainlink-powered decentralized Price Feeds provide Deerfi with highly accurate, available, and tamperproof price data that our smart contracts use to issue fair market loans and maintain full collateralization.”
Lin Xia Hong, the lead developers of Deerfi protocol, commented:
“Deerfi provides an extra layer of composability for Uniswap LP tokens, enabling LPs to generate more yield with their assets than ever before. Chainlink helps us unlock that value of LP tokens by ensuring that they are accurately priced without being subject to data manipulation attacks carried out on a single exchange. This allows users to interact with Deerfi knowing that it’s lending functions operate according to fair market prices, greatly increasing user trust in the protocol.”
Amid the recent DeFi boom, Chainlink price oracles services have seen a huge demand. Keeping in mind Polkadot as an emerging ecosystem for next-gen DeFi products, the company has also recently launched a new DOT/USD Price Feed to build DeFi products for Polkadot’s native asset.
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