Oracles that allow blockchains like Ethereum to interact with data outside the chain are fueling the decentralized financial sector. Fortunately for the DeFi area, the heavyweight Coinbase is now emerging for the exchange of crypto currencies.
On Thursday April 23rd, the San Francisco-based crypto exchange announced the launch of the Coinbase Price Oracle, which will allow anyone or any project to get signed price data via an API extracted from the extremely liquid BTC-USD and ETH- USD from Coinbase Pro comes from Markets.
The move comes after the DeFi stakeholders asked Coinbase to publish such a price feed for months. Why? Because Coinbase’s popularity can ensure that its price feeds are very reliable and informative, as the exchange explained on Thursday:
“Coinbase is one of the most trusted companies in the crypto space and an integral part of our mission is to grow the crypto economy. A highly reliable price feed anchored in Coinbase’s secure infrastructure can help make the DeFi ecosystem more secure, reduce systemic risk, and spark the next wave of growth and adoption. “
In the oracle
The new Coinbase Oracle is guaranteed by “first-class key storage technologies”, according to the manufacturers. In particular, the system will provide “protective measures against manipulation of the exchange rate or invalid data”.
With that in mind, the feed’s data is safe and trustworthy. However, these aren’t the only reasons the Coinbase Oracle is interesting.
Another unique aspect of the new system is that it has been made compatible with the so-called “Open Oracle” smart contracts developed by the makers of Compound, one of the three most successful DeFi companies. This compatibility means that Coinbase Oracle will be useful for many future projects as the Open Oracle contracts provide an opportunity for standardization regarding the use of DeFi oracles.
On the news, Compound CEO Robert Leshner said
“Coinbase Oracle will increase the security and decentralization of Compound’s price feed, which is critical to the protocol and ecosystem of Compound-based applications. We’re not alone – the rest of DeFi will benefit from faster development, consistent data, and common standards. “
Best to combine with other oracles
Coinbase Oracle is a useful tool, but hardly an independent oracle solution in DeFi. First of all, it’s scope is limited: it only covers Coinbase Pro’s BTC-USD and ETH-USD price feeds, and DeFi is much more needed than just BTC and ETH.
Additionally, Coinbase Oracle’s data is most useful when combined with data from other unrelated oracles.
“To be fair, I would not * only * use Coinbase’s prices as a full Oracle (remember the flash crash in 2017?), But add it as another source for medianization,” noted Mariano Conti, Head of Smart Contracts at MakerDAO, on Twitter.
Accordingly, Coinbase Oracle is another useful tool in DeFi’s collective toolbox and not anything close to a competitor with full-fledged decentralized oracle projects like Chainlink, which can do much more than just provide price feeds.
“To believe that the price feed signed by Coinbase is competing with Chainlink is like believing that YouTube is competing with its video artists or that the military is competing with weapons manufacturers,” said Chainlink community ambassador ChainLinkGod, pseudonymous.
Coinbase is evolving into DeFi
Last week, Coinbase Custody rolled out support for compound governance, which means that users of the institutional platform can now vote on compound governance matters without having to remove their COMP tokens from the platform.
A few weeks earlier, Coinbase announced that the USDC Bootstrap Fund is investing 1 million USDC and 100,000 USDC respectively in the decentralized exchange Uniswap and the lossless Ethereum savings game PoolTogether.
In addition, these messages came just days after the DeFi crypto exchange integrated dApps Compound and dYdX into the non-custodial Coinbase mobile wallet app.
1.983
Comments are closed.