The Coinbase exchange has announced the launch of its price oracle dedicated to decentralized finance (DeFi).
#DeFi has grown to more than $1B in assets pooled in a range of protocols. The Coinbase Price Oracle provides a critical service to the DeFi ecosystem: a trusted price feed that will make platforms safer, more reliable and unlock the next wave of adoption. https://t.co/ueUhRLX6r2
— Coinbase (@coinbase) April 23, 2020
The opening words of Coinbase’s announcement are linked to what happened in the last few weeks, which involved decentralized finance (DeFi) suffering losses of millions of dollars, suggesting that both traditional and decentralized exchanges (DEX) can be subject to manipulation or bugs when it comes to prices.
Here is where Coinbase’s price oracle comes in – all the documentation is here – which, thanks to the data provided directly by Coinbase Pro, one of the most famous exchanges in the crypto world, will allow anyone to integrate the API to have a reference price for the BTC-USD and ETH-USD markets; moreover, with the public key of the oracle anyone will be able to verify the authenticity of the data.
Sometimes the volumes of an exchange may not correspond to the truth, but if these APIs are used, the users can trust what they see, an advantage that both exchanges and other protocols would get. Compound CEO Robert Leshner stated:
“Coinbase Oracle will increase the security and decentralization of Compound’s price feed, which is mission-critical to the protocol and the ecosystem of applications built on top of Compound. We’re not alone – the rest of DeFi will benefit with faster development, consistent data, and shared standards.”
The CEO of dYdX, Antonio Juliano, is of the same opinion. He reaffirms the reliability of Coinbase and its products like this oracle:
“A Coinbase Price Oracle will be hugely impactful for the DeFi ecosystem – price oracles are used in every lending & derivatives protocol. Coinbase is uniquely positioned to provide oracle prices as they’re the most trusted and secure institution in the space. These prices can be used as an input to help create more decentralized and secure price oracles for the ecosystem.”
At this point, it seems that decentralized finance has obtained a new tool to alleviate and mitigate a deficient aspect of this sector which, without a certain and secure point of reference, would be easily circumvented and could suffer possible attacks or failures in the system.