ValueDeFi Integrating Chainlink Price Feeds to Ensure Maximum Security for Relaunch of MultiStables Vault
In light of the recent flash loan exploit on our previous oracle mechanism, we have engaged multiple security experts to find a solution for securing the ValueDeFi protocol. After many focused discussions and weighing the different options, we found Chainlink to be the best oracle solution that provides a sufficiently robust and tamper-resistant price oracle solution capable of mitigating flash loan attacks.
The MultiStables Vault relaunch will utilize Chainlink Price Feeds for all supported stablecoins to ensure our oracles maintain round the clock market coverage across all trading environments. This removes our exposure to temporary flash loan-induced price distortions that exist when pulling data straight from Curve.finance’s on-chain liquidity pools or any other on-chain generated price feed such as Uniswap.exchange.
Backed by high quality data, secure and transparent oracle infrastructure, and strong economic incentives, Chainlink’s decentralized price feeds are inherently resilient against flash loan attacks thanks in part to the wide market coverage they provide. As such, we have elected to use Chainlink’s existing stablecoin price feeds to calculate the underlying value of our Liquidity Pool tokens, preventing manipulation of user-backed reserves from occurring.
To better understand how Chainlink will secure the ValueDeFi protocol moving forward, this post will detail its core feature set and explain how the DeFi ecosystem as a whole can learn from our mistakes by avoiding the usage of insecure on-chain generated price oracles.
Bringing Data Quality and Market Coverage to the MultiStables Vault
Ensuring the security of user funds is our top priority. In our revamp of the Multistable Vault, we set out to integrate an oracle mechanism that provides accurate price feeds heavily resistant to failures and/or manipulations from a single source or oracle node. Providing such guarantees requires a decentralized oracle network that generates an aggregated price feed reflective of market-wide price discovery as opposed to an oracle sourcing the price action of a single exchange.
We identified Chainlink as the oracle solution most focused on and optimized to provide data quality and oracle security, having already proven its ability to secure billions of dollars in value on mainnet across many leading dApps DeFi, even during high network congestion periods with spiking gas prices. Chainlink provides these guarantees by employing decentralized computation and strict quality control, wherein users are supported exclusively by aggregated oracle networks of secure oracle nodes and premium data providers. They also practice security through transparency: the real-time and historical performance of oracle networks and their individual nodes can be monitored on-chain by users.
All Chainlink nodes are run by leading security and blockchain DevOps teams, providing strong resistance to Sybil attacks. Each node sources data from multiple off-chain data aggregators like BraveNewCoin, with all nodes’ responses aggregated to form a single price update. This provides an unparalleled level of data quality and market coverage, as each data source represents an aggregated price point, every node aggregates from multiple data sources, and all oracle networks aggregate from multiple independent nodes.
In addition to high quality data and secure node infrastructure, Chainlink’s framework is conducive to our scaling efforts. Its use of external adapters allows us to connect to any off-chain API for premium data to support future vaults. Chainlink also features a framework for scalable security and a sustainable economic model, where more nodes and data sources can be easily added to secure higher value pools, while those costs, especially amongst widely used feeds, can be shared amongst the many DeFi protocols relying on it.
Integrating Chainlink Price Feeds ensures that the prices consumed by the MultiStables Vault are highly-protected against data manipulation attacks occurring on a single exchange or even a small subset of exchanges. Additionally, since Chainlink Price Feeds are updated in an asynchronous manner over multiple transactions, flash loans (which only exist within a single transaction) have no effect, preventing an entire category of attack vectors altogether.
Securing the DeFi Ecosystem With Chainlink Price Feeds
The primary lesson we have learned from this exploit is that DeFi protocols using on-chain generated price oracles like LP Pools or Dexes are at great risk of succumbing to the same flash loan exploits experienced by ValueDeFi. Not only are such DeFi protocols at risk of flash loan funded attacks, but their overall lack of market coverage makes them vulnerable to numerous other forms of data manipulation. This issue is magnified for assets with lower liquidity, as it requires less capital to distort the on-chain price of that asset.
As the value locked in DeFi scales up, the usage of secure price oracle solutions will only grow in importance. On-chain generated price oracles are fundamentally unable to provide a sufficient level of market coverage and security guarantees for DeFi. We hope others learn from our experience and shift to a provably secure and reliable oracle design like Chainlink.
Working with the Chainlink team and its security experts has enabled us to significantly improve our price oracle security and data reliability, ensuring the next-generation of ValueDeFi products are resilient to flash loan attacks and lagging on-chain price feeds. We will continue to work with the Chainlink team on bolstering our oracle practices and plan to leverage them within future ValueDeFi products.
About Value DeFi Protocol
The Value DeFi protocol is a platform and suite of products that aim to bring fairness, true value, and innovation to Decentralized Finance.
We operate on four core tenets: increase accessibility to yield farming; provide next-generation on-chain voting for governance; reward our stakeholders with flexible, optimized, and profitable vault strategies and aggregation services; and protect our community’s funds through the integration of an insurance treasury.
Value DeFi has developed three flagship products within the defi space: Value Liquid, Farms-as-Service, and Value Vaults. Value Liquid is an automated market-maker built on Ethereum that allows anyone to create trading pools with flexible ratio pairs, add liquidity, earn trading fees. Next, Farms-as-a-Service is a one stop solution for any project to bootstrap their liquidity mining program with flexible customizations. Finally, Value Vaults, state-of-the-art multi-strategies yield-optimizers that allow unprecedented composability and flexibility of liquidity provider assets to maximize returns.
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If you’re a developer and want to quickly get your application connected to Chainlink Price Reference Data, visit the developer documentation and join the technical discussion in Discord. If you want to schedule a call to discuss the integration more in-depth, reach out here.
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