Cryptocurrency exchange operator Binance have announced a new collaboration with Chainlink. The partnership will see Binance connecting its crypto data to other blockchain platforms. The move is part of a broader effort to support the expansion of Decentralized Finance (DeFi).
Binance is a Big Believer in DeFi
DeFi is a major trend right now despite being at its nascent stage. DeFi protocols rely on blockchain-based smart contracts to build decentralized infrastructures that could host financial applications inspired by traditional finance. Think about lending, derivatives trading or decentralized exchanges. Thanks to the distributed ledger technology (DLT), they don’t require any central body to control the markets and act as a guardian.
Binance has been a big believer in DeFi. The Malta-based firm recently launched its own decentralized exchange called Binance DEX, which operates separately from its main platform.
The company, led by Changpeng Zhao (CZ), argues that while smart contracts can be flawless, it’s imperative to focus on the data that they rely on as well. If the data triggering a smart contract is not reliable, then the contract fails no matter how good its code is. Thus, it is important that DeFi developers access trusted data via secure oracles and this where Chainlink can help.
Binance CEO CZ commented:
We support the development of Decentralized Finance as an important part of the ecosystem. Binance works with many blockchain projects, including Chainlink, to bring freedom of money everywhere, and through the help of Binance data and Chainlink’s network, we can help accelerate the growth of DeFi.
He said that the exchange was exploring ways to connect its platform to blockchains with the help of Chainlink. Binance itself offers high-end data that could be used by other DeFi projects.
Binance provides an application programming interface (API) that currently covers 637 crypto pairs. Given that the exchange has millions of users from more than 100 countries across all timezones, Binance is a great source of 24/7 price discovery. The company wants to share its valuable data with other DeFi Dapps by leveraging Chainlink’s oracle network.
“Making these datasets available on public blockchains allows interoperability across centralized and decentralized worlds, whereas DeFi Dapps can greatly benefit from data produced by highly liquid centralized exchanges,” Binance says in its statement.
Chainlink’s oracle technology will help DeFi projects access Binance data off-chain in a secure manner. For this, Chainlink has created an external adapter to allow smart contracts to integrate data from the Binance API, thus enabling flawless connectivity so that any node operator can provide data.
DeFi applications using Binance data can build a variety of new products, including derivatives like futures, options, or swaps that would rely on specific cryptocurrencies or groups of cryptocurrencies. They can also automate trading around a variety of data points.
“The possibilities are really limitless given that the Chainlink oracles can use any data point to trigger some type of action,” Binance said.
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