Coinbase has launched a price Oracle to ensure the security of crypto assets blocked in applications and DeFi protocols.
This week, Coinbase launched Oracle, which provides data from Coinbase Pro about the exchange rates of BTC and ETH against the US dollar. In addition, it is signed with the private key of Coinbase. This means that when using the mechanism by third-party services and protocols, it will always be possible to verify that the data is received from the exchange.
In the blog
Coinbase States that coinbase Oracle can be used by blockchains and combined with other data streams for use in DeFi projects to perform lending, margin trading, collateral liquidation, and derivatives functions.
The new mechanism should counter the risks that arise when using DeFi protocols that use third-party data that require confidence in the accuracy of the price. Coinbase also noted the risks of using data from decentralized exchanges. This has already led to new types of attacks, such as on the bZx project earlier this year.
“A highly reliable price stream tied to the secure infrastructure of Coinbase can help make the DeFi industry safer, reduce systemic risks, and launch the next wave of growth in the popularity of decentralized Finance,” the report says.
Oracle is supported by the same secure key storage infrastructure that is used in Coinbase exchange operations. It also offers protection against price manipulation by exchanges or invalid data.
“Coinbase Oracle will enhance the security and decentralization of the Compound price stream, which is critical for the Protocol and the ecosystem of applications built on the basis of Compound,” said Compound CEO Robert Leshner. “We are not alone – the rest of the DeFi participants will benefit from faster development, consistent data, and common standards.”
The Coinbase blog States that the new Oracle is provided via an API compatible with Open Oracle , an open source set of Ethereum smart contracts originally developed by Compound to help standardize and improve compatibility of various Oracle price data sources.
Projects using Open Oracle can choose the channels they want to include in the calculation of the average price returned by the Oracle contract. To ensure the accuracy of this value, Coinbase has developed its stream with three “layers” of protection, including the quality of data received from the highly liquid Coinbase Pro platform.
In addition, an off-network filter is applied that blocks data on the prices of crypto assets that significantly deviate from the expected volatility. An in-network filter is also applied via the DelFiPrice Open Oracle smart contract, which again rejects price data points significantly different from the last reported price from so-called “anchor sources”.
“Price oracles are used in every lending and derivatives Protocol,” says dYdX CEO Antonio Juliano. “Coinbase is uniquely positioned to provide a price Oracle, as the exchange is one of the most trusted and trusted companies in the industry.”
He also added that using Oracle’s Coinbase data could help create “more decentralized and secure price oracles for the industry.”
Recall that in March, the blockchain platform Solana and the developer of decentralized price oracles Chainlink announced
about the joint development of a “high-frequency” price Oracle for DeFi applications.