Chainlink and DMM integrate real assets to DeFi market on Ethereum

By March 3, 2020Ethereum
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  • DeFi Money Market (DMM) and Chainlink oracles will function as a bridge between crypto assets and real assets on Ethereum.
  • The DMM will allow its users to take out loans by placing “real assets” as collateral on the Ethereum network.

The Chainlink ecosystem and DeFi Money Market (DMM) are cooperating to bring “real assets” to the Ethereum mainnet. According to a publication on Medium, DMM will be a bridge between digital and real assets. Through this connection, the owners will be able to take out loans and earn interest on-chain.

The DeFi money market (DMM) is a blockchain based market supported by real assets. DMM uses Chainlinks oracles to collect off-chain data. It currently has loans backed by real assets. These assets have been translated into tokens in the DMM ecosystem and have reached a value of $10 million since its launch.

A bridge between crypto and fiat money on Ethereum

According to the publication, DMM offers its users the possibility of capitalizing on their assets and traditional money through blockchain technology. In addition, DMM users will be able to acquire loans and use their real-world assets as collateral. DMM aims to be the first market to bring together traditional money and assets with cryptocurrencies:

This enables low-risk investors the ability to lend digital currency for passive interest income, while borrowers can receive digital currency loans for short-term capital by pledging their real-world assets as collateral.

As mentioned, DMM uses Chainlink’s oracle technology to obtain information about tokenized real-world assets. In addition, DMM’s ecosystem allows its users to choose the best asset on Ethereum to support their digital assets: Dai Money Market, USDC Money Market, among others. The ecosystem offers different accounts for each asset in what they call DeFi Money Market Accounts (DMMA).

Once the user selects the asset, the account is converted to one of the DMM tokens (mDAI, mUSDC, mETH, etc). This is done through a smart contract that has a fixed annual yield percentage:

The initial amount of USDC is programmatically pledged to be returned, plus a prescribed amount of interest. When withdrawn, the mUSDC is converted back to USDC plus the interest. As an example, if a person deposited 1 USDC and the APY was 6.25% and held the corresponding mUSDC for one year, they would get back 1.0625 USDC. Interest is accumulated per block and people may enter and exit the DMMA with no time restrictions.

DMM guarantees liquidity by maintaining a percentage of the token as a reserve ratio. The reserve ratio will be increased or decreased according to the data provided by the Chainlink oracles.

We believe the over-collateralization, diversification, and consistency in interest rates makes the DMMA a compelling addition to the Ethereum ecosystem.

DMM allows any real-world asset to be used as collateral. Assets are secured with “the first lien, a high level secured position”. This protects the assets in the event of non-payment. Thus, DMM seeks to ensure that the assets and earnings of its users are kept safe, without losing liquidity in the ecosystem.

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Last Updated on 3 March, 2020

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