Cryptocurrency exchange Coinbase has released a price oracle that allows anyone to publish price data on-chain. The Coinbase Oracle, a signed price feed, grants users free access to data for BTC-USD and ETH-USD markets, the company announced Thursday. The idea is to make decentralized finance more secure.
The price feed is sourced from Coinbase Pro and is updated every minute, the company explained. An oracle is a real-time price feed provided by a third party to decentralized financial networks (DeFi). The most widely used oracles are those of Uniswap and Kyber. Decentralized networks use oracles to provide services that include derivatives, collateral liquidations, and margin.
However, existing price feeds, which anchor a $1 billion DeFi economy, have been criticized for a lack of security and a failure to provide accurate prices. There are instances of attacks. Crypto lender Bzx lost more than $645,000 worth of ETH in an oracle attack in February — the second such violation it has endured.
With its oracle, Coinbase is promising more safety. In a statement, the exchange detailed:
Anyone can publish the prices on-chain and since the data is already signed by Coinbase’s private key, there is no need to trust the publisher. Using the Coinbase price oracle public key, anybody can verify the authenticity of the data.
Coinbase highlighted the risks associated with getting data from off-chain sources. Using off-chain data requires trusting the publisher to post correct prices and keep the signing key safe, it said, adding that “the latter historically has proven to be a difficult problem, especially when stakes are high.”
By comparison, the Coinbase Oracle claims to host a filtering mechanism that rejects data points, which significantly deviates from the expected volatility of each asset while protecting against exchange price manipulation or invalid data.
What do you think about the Coinbase Oracle? Let us know in the comments section below.
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Published at Fri, 24 Apr 2020 23:15:54 +0000