Synthetix Network Token (SNX) will now officially cooperate with Chainlink and use the price Oracle from LINK for its own exchange. Synthetix, the DeFi protocol for trading asset-linked synthetic tokens on Ethereum, finally decided in favor of Chainlink after a lengthy test phase.
Chainlink becomes the Oracle at SNX
Synthetix today announced the full integration of Chainlink Price Oracle for all assets on the Synthetix exchange, including price feeds for all synthetic assets on the index. Synthetix had previously implemented Chainlink Price Oracle in commodity and forex synths, but will now switch to the Chainlink solution on the way to a fully decentralized governance of internally maintained oracles.
Synthetix is making great strides forward
Synthetix generates synthetic aseets as tradable tokens on Ethereum, with the prices for various synths being linked to real investments. From crypto currencies like Bitcoin Trader or the TRX tokens from Tron to currencies like the British pound or the euro. Further synthetic assets are planned for the future, which are linked to assets such as oil or food, raw materials and other currencies.
Synthetic assets are backed by collateral worth 750% of their value when they are created, which keeps the assets liquid in the event of major price fluctuations.
Synthetix announced further details in June on plans to eventually cede power in the protocol to holders of the SNX protocol token. So far, however, there has not yet been a date for the complete decentralization of Synthetix governance. The leadership roles will be divided into three decentralized autonomous organizations (DAOs) that will oversee the protocol, grants and funding of the Synthetix development team. So far this year, Synthetix SNX protocol tokens have increased by more than 500%.
Chainlink oracles are becoming increasingly important
The changeover to full Chainlink integration represents an important milestone for the Synthetix protocol, which until today was heavily dependent on Oracle, which was built and maintained by the internal development team. As with other protocols such as Compound and Ren, the Synthetix developers retained a greater degree of control over the early development of the protocol in order to carefully develop the intelligent contract architecture and control the risk.
In contrast, other DeFi projects like Yearn Finance and Yam Finance have decentralized all administration from the start, often doing little or no testing before introducing code updates.
The Synthetix statement outlined the testing process that has been applied to Chainlink Oracles over the past few months to ensure that the transfer of price data for different assets can scale with demand as new synths are added to the platform. Chainlink also reportedly provided more accurate pricing data than Synthetix’s in-house developed Oracle solutions, helping to lower spreads and consistently reliable market data feeds.
Chainlink is taking another big step forward and is positioning itself more and more as Oracle for decentralized applications and protocols. We are curious which partnerships we can expect this year.
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