Aave announced the integration of its protocol with Chainlink for the launch of the Oracle Aave Network.
The latter, in fact, is now active on the Ethereum mainnet and provides 16 cryptocurrency price feeds. In this way, Aave’s DeFi loan protocol can leverage off-chain price data to calculate interest rates using a decentralized network of oracles.
Aave is an open-source and non-custodial protocol that allows customers to earn interest by providing liquidity to lending pools. Deposits are tokenized in the form of aTokens and they earn interest in real-time.
The protocol offers flash loans that allow users to obtain funds instantly and easily, without collateral. In addition, it uses 16 different assets, 5 of which are stablecoins.
Integration with Chainlink’s decentralized oracles allows the Aave protocol to capture real-time price information on the 16 assets under management, ensuring that prices reflect real market conditions.
Aave must take into account prices and interest rates from the main centralized and decentralized platforms in order to correctly understand the current market dynamics.
Chainlink’s oracles capture this information off-chain and make it available on-chain within the Ethereum ecosystem. This allows Aave to use a decentralized network of independent, Sybil-resistant oracles to obtain the necessary information from all major platforms.
Once obtained, they are aggregated to formulate an appropriate on-chain price based on the weights specified in smart contracts at the time of lending.
Aave’s Software Engineer, Emilio Frangella, said:
“Chainlink helped us reduce our time to market, while at the same time providing the highest guarantee of data integrity, decentralization and security. We believe that decentralized oracles are going to be the key for any DeFi platform in the future, and we are proud to be the first open-source decentralized money market protocol to leverage their services. We see the future of DeFi as strictly connected to the ability to bring interchain communication and real-life assets to Ethereum, and this is the direction we want to head with our collaboration with Chainlink”.