Hodl DAO Integrates Chainlink Price Feeds To Help BTCH(odl) Index Maintain Its Peg

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Hodl DAO is pleased to announce our DeFi protocol has integrated Chainlink Price Feeds on Ethereum mainnet. By integrating the industry-leading decentralized oracle network, BTCH has access to high-quality, tamper-proof price feeds needed to help keep our index pegged to the 365-day moving average price of BTC and provide high-quality data to our rebalancing, bonding, and staking mechanisms. This will provide our users with stronger assurances that our index will maintain its peg and incentives will be distributed fairly.

Our initial integration involves the use of BTC/USD Price Feed. We chose Chainlink as our go-to oracle solution because its infrastructure is seamless to integrate and time-tested in production. Chainlink already helps secure leading DeFi protocols responsible for tens of billions of dollars in smart contract value, maintaining robust security and high availability even amidst unexpected events, such as exchange downtime, flash crashes, and data manipulation attacks via flash loans.

BTCH(odl) is a DeFi index pegged to the 365-day moving average price of BTC. It’s designed to give investors long-term exposure to BTC while reducing short-term rebalancing thanks to our rebalancing, bonding, and staking mechanism. Ultimately, this reduced volatility is designed to create a more stable product that is easy for investors to ‘hodl’, as they’re less exposed to the greater drawdowns and rallies of spot prices.

In order to help secure our index pegged to BTC, we needed access to fresh asset prices that are supplied directly on-chain in a highly reliable manner. Fair market asset prices should reflect a volume-weighted average from all trading environments. Thus, we needed to make use of an oracle network to fetch aggregated price data off-chain and deliver it on-chain to be consumed by our application.

After reviewing various oracle solutions, we integrated Chainlink Price Feeds because they provide a multitude of critical features such as:

• High-Quality Data — Chainlink Price Feeds source data from numerous premium data aggregators, leading to price data that’s aggregated from hundreds of exchanges, weighted by volume, and cleaned of outliers and wash trading. Chainlink’s data aggregation model generates more precise global market prices that are inherently resistant to inaccuracies or manipulation of any single or small set of exchanges.
• Secure Node Operators — Chainlink Price Feeds are secured by independent, security-reviewed, and Sybil-resistant oracle nodes run by leading blockchain DevOps teams, data providers, and traditional enterprises. Chainlink nodes have a strong track record of reliability, even during high gas prices and infrastructure outages.
• Decentralized Network — Chainlink Price Feeds are decentralized at the data source, oracle node, and oracle network levels, generating strong protections against downtime and tampering by either the data provider or oracle network.
• Reputation System — Chainlink provides a robust reputation framework and set of on-chain monitoring tools that allow users to independently verify the historical and real-time performance of node operators and oracle networks.

Next Steps

In the future, we’re planning to integrate other Chainlink trust-minimized services, such as Chainlink Keepers and Chainlink VRF. Chainlink Keepers can help our protocol to securely automate rebases of pre-bonds utilizing decentralized infrastructure, enabling the protocol to distribute rewards to users in a trust-minimized manner. Furthermore, when we launch BTCH Exposure, our upcoming product that provides a convenient way to get a fixed exposure ratio to an asset pair, we’ll use Chainlink Keepers to help automate our rebalancing mechanism. This will help keep our protocol decentralized and cost-effective for our users.

Chainlink VRF works by combining block data that is still unknown when the request is made with the oracle node’s pre-committed private key to generate both a random number and a cryptographic proof. The Hodl DAO smart contract will only accept the random number input if it has a valid cryptographic proof, and the cryptographic proof can only be generated if the VRF process is tamper-proof. This provides our users with automated and verifiable assurances directly on-chain that raffle drawings are provably fair and were not tampered with by the oracle, outside entities, or the Hodl DAO team.

We’re also looking to launch raffles in the future and will use Chainlink VRF to generate verifiably random numbers to help select the winners. Given that a smart contract using VRF won’t accept a random number without valid cryptographic proof, neither an oracle, external entities, nor our team would be able to tamper with the RNG process. This will increase transparency for our users as they can audit the process for themselves with on-chain proof.

“Chainlink is the clear industry-leader of oracle services as it provides DeFi protocols with core trust-minimized infrastructure that’s both cutting-edge technologically, and thoroughly time-tested in the market. As we continue to expand our protocol, we’ll integrate further Chainlink services to help provide our users with the transparency they’ve come to expect from DeFi protocols operating in the blockchain space.” — The Hodl DAO team

About Chainlink

Chainlink is the industry standard for building, accessing, and selling oracle services needed to power hybrid smart contracts on any blockchain. Chainlink oracle networks provide smart contracts with a way to reliably connect to any external API and leverage secure off-chain computations for enabling feature-rich applications. Chainlink currently secures tens of billions of dollars across DeFi, insurance, gaming, and other major industries, and offers global enterprises and leading data providers a universal gateway to all blockchains.

Learn more about Chainlink by visiting chain.link or read the documentation at docs.chain.link. To discuss an integration, reach out to an expert.

About Hodl DAO

The Hodl DAO is a decentralized protocol that provides a less-volatile BTCH index, which is pegged to the 365-day moving average price of BTC, for users to get access to a less volatile BTC exposure, in an easy, and trustless way, while at the same time, enjoying extra rewards.