Innovative DeFi application Alkemi integrates Chainlink oracles

By January 24, 2020 Ethereum
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  • Chainlink has gained a new partner in Alkemi, which will launch a new type of decentralised financial application (DeFi) in the second quarter of 2020.
  • Alkemi has already integrated Chainlink’s technology to provide decentralized and tamper-proof off-chain data for its platform.

One day after Chainlink announced a cooperation with the “Ethereum of South Korea”, ICON (ICX), the project has attracted the next partner on board. Alkemi is an open, Ethereum-based financial platform for prime brokerage that integrates Chainlink’s Oracle technology. By using Chainlink, Alkemi hopes to benefit from a “highly accurate and reliable stream of crypto-asset price data” and thus position itself as a prime broker that meets the stringent requirements of institutional investors.

Alkemi caused a stir in May 2019 as a new type of decentralized financial application (DeFi). With Outlier Ventures, Xpring (Ripple), Coven.VC (ConsenSys), 100x Advisors, Techstars and ARC Fund, Alkemi counts numerous well-known tech companies among its financiers and supporters. Alkemi aims to create a liquidity system for exchanges by creating an accessible pot to which exchanges can turn when demand increases faster than supply.

With this new type of decentralized financial application (DeFi), Alkemi intends to increase the liquidity of the crypto market. Exchange users can offer their coins for interest. To do so, they can connect their exchange wallet with a smart contract of the Alkemi protocol. As with a savings account, Alkemi allows owners to lend their coins on crypto exchanges, while users can set their own blocking periods. Alkemi’s Mainnet launch is scheduled for the second quarter of 2020 according to the roadmap.

Alkemi relies on the decentralized oracles of Chainlink

As Alkemi writes in the official announcement, Chainlink’s oracles solve the problem that the smart contracts require reliable and tamper-proof data available outside the blockchain (off-chain). The data can be accessed by Chainlink oracles via external data feeds and APIs. This introduces an element of trust, as Alkemi writes:

Alkemi cannot rely on off-chain price information from a single corruptible source of truth. Chainlink, operating as a fully decentralized network, decreases the likeliness of false or inaccurate data reporting while simultaneously preventing network downtime by aggregating data responses from multiple oracles that query a variety of data sources.

Furthermore, the announcement highlights that Alkemi has integrated Chainlink initially for the lock and unlock mechanism included in the smart contracts (wallets) created by users. This mechanism allows the user (liquidity provider) to set a time period for the blocking of their cryptocurrency. In addition, the user can also set a price threshold which, once exceeded, causes the assets to be unlocked and made available for withdrawal before the time expiration lock.

In addition, Alkemi uses Chainlink for an Oracle price feed, which is required to determine if the price condition for releasing the funds is met. Alkemi chose Chainlink’s Oracle technology because it has become the de facto standard:

Chainlink’s protocol is facilitating trusted marketplaces for obtaining quality oracles, which is quickly becoming the de-facto standard in the Oracle-as-a-Service category. Chainlink has already seen wide adoption across the blockchain landscape including an array of open finance projects as well as large enterprises such as Google.

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Last Updated on 24 January, 2020

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