Hedge is pleased to announce that Chainlink Price Feeds have been integrated to the Hedge Protocol on Solana mainnet. By integrating the industry-leading decentralized oracle network, the Hedge Protocol now has access to tamper-proof, high-speed market data needed to help determine the values of collateral assets in Hedge vaults, which are used to determine collateral-to-debt ratios and trigger liquidations, ultimately helping ensure protocol solvency.
To start, Hedge has integrated the SOL/USD Price Feed for the Hedge SOL vault, with more feeds to come in the future.
Chainlink Price Feeds were chosen because they have a proven history of helping secure billions of dollars in value for DeFi protocols across the multi-chain ecosystem. Chainlink Price Feeds are operated by DevOps teams with years of experience, and the underlying oracle mechanism offers multiple layers of decentralization at the data source, oracle node, and oracle network levels for unparalleled security.
Helping Secure Hedge Vaults with Chainlink
Hedge allows users to take out interest-free loans for a one-time fee by depositing collateral to mint USH, a stablecoin soft-pegged to the US dollar. Users are incentivized to keep their collateral-to-debt ratio above 110% to avoid liquidation. When an undercollateralized vault is liquidated, users who have deposited USH in the stability pool are returned discounted collateral as a reward with the rest of the collateral distributed to the liquidator and HDG token holders. USH keeps its floor price at $1 by being redeemable for its underlying collateral at all times, though a redemption fee ensures this happens infrequently and only when needed.
Accurate collateralization and liquidation metrics depend upon robust price data. If Hedge’s smart contracts calculate collateral values with inaccurate or manipulated price data, this can result in undercollateralized loans and cause unwanted liquidations and protocol insolvency.
Hedge integrated Chainlink Price Feeds because they are the most widely used, time-tested, and decentralized price data feeds in the smart contract ecosystem. Chainlink Price Feeds offer a multitude of superior features, such as:
- High-Quality Data — Chainlink Price Feeds source data from numerous premium data aggregators, leading to price data that’s aggregated from hundreds of exchanges, weighted by liquidity depth, and cleaned from outliers and suspicious volumes. Chainlink’s data aggregation model generates precise global market prices that are resistant to API downtime, flash crash outliers, and data manipulation attacks like flash loans.
- Secure Node Operators — Chainlink Price Feeds are secured by independent, security-reviewed, and Sybil-resistant oracle nodes run by leading blockchain DevOps teams, data providers, and traditional enterprises with a strong track record for reliability, even during high gas prices and extreme network congestion.
- Decentralized Network — Chainlink Price Feeds are decentralized at the data source, oracle node, and oracle network levels, generating strong protections against downtime and tampering by either the data provider or the oracle network.
- Transparency — Robust, publicly available reputation frameworks and on-chain monitoring tools allow users to independently verify the historical performance of node operators and oracle networks, as well as check the real-time prices being offered.
“Reliable price data is mission-critical for any lending platform, and Chainlink Price Feeds are the most battle-tested solution on the market. With this integration of Chainlink Price Feeds to help calculate collateralization and liquidation metrics, Hedge users can have higher assurances that their 0% interest loans are supported by secure and accurate price data.” — Sebastian Grubb, founder of Hedge
Chainlink is the industry standard for building, accessing, and selling oracle services needed to power hybrid smart contracts on any blockchain. Chainlink oracle networks provide smart contracts with a way to reliably connect to any external API and leverage secure off-chain computations for enabling feature-rich applications. Chainlink currently secures tens of billions of dollars across DeFi, insurance, gaming, and other major industries, and offers global enterprises and leading data providers a universal gateway to all blockchains.
Hedge is an interest-free, low minimal collateral ratio lending protocol on Solana. It gives users the best deal on access to liquidity against their collateral.