Synthetix Becomes The Latest DeFi Project To Fully Integrate Chainlink’s Decentralized Oracles
- Decentralized finance protocol, Synthetix, an exchange for trading synthetic assets on the Ethereum blockchain, is moving towards full decentralization.
- In a blog post published on Sept. 1, the platform will integrate Chainlink’s decentralized oracles as a step towards its planned decentralized governance.
The DeFi protocol had previously integrated Chainlink oracles to connect off-chain data, relying on their internal oracles for on-chain data. However, Chainlink will now be fully used to remove any dependence on centralized parties as oracles providing data on the price of commodity crypto and forex synthetic assets (Synths) traded. The statement reads,
“We are excited to announce that after an eight-month successful implementation of Chainlink’s decentralized price oracles for our commodity and FX Synths, we have now switched the rest of our price oracles over to Chainlink as per SIP-36.”
Chainlink’s oracles provide a wide range of nodes that provide greater security while allowing scaling up of the assets (Synths) minted on the platform. Furthermore, Chainlink’s Data Price Reference allows multiple DeFi projects to finance the shared pools and price feeds, building a shared economic model that lowers the cost of data referencing across all projects.
Synthetix decentralization efforts follow a similar path being established by DeFi protocol such as Compound (COMP) –which switched from centralized governance to a decentralized system with its governance token.
The integration comes barely a month following the decommissioning of the Synthetix Foundation as the governing council, replacing it with three community-led autonomous organizations (DAOs) – synthetixDAO, grantsDAO, and protocolDAO.
Synthetix suffered a massive attack in July 2019 after hackers breached the oracles making away with over $37 million. Investigations showed the oracle attack arose from faulty bots and a centralized point of attack. The full integration of Chainlink oracles marks a significant improvement in Synthetix, with such cases expected to reduce to a minimum as decentralization improves.