The LINK token holders can now earn 3% interest if they use the freshly launched Aave protocol so let’s find out more in the chainlink coin news.
In the newest DeFi launch, money market protocol Aave will gather off-chain pricing data through the decentralized oracle services of Chainlink. LINK token holders will also have the opportunity to earn some interest with Aave. On January the 8th of 2020, the mainnet of Aave protocol was launched and was announced that “the first attempt in DeFi at uncollateralized lending,” by the Aave developer Emilio Frangella.
The Link token holders now have the opportunity to take a loan of cryptos from a reserve if they return the initial sum plus a certain percentage fee, to the reserve once the transaction is finished.
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While the service is first and foremost oriented towards the developer community and it requires a certain amount of technical knowledge the wider DeFi community can reap the rewards. In a recent interview Pablo Candela Andrade, the community manager of Aave said:
“Some opportunities for flash loans would be, for example, arbitrage opportunities, but also rebalancing a loan you have opened in a protocol. [You could] open it back in another [protocol], liquidate a loan or position in some platform, for example, a maker Vault, and pay back the flash loan with the margin you got. ”
The newest addition to the list of 16 tokens on offer is the token of Chainlink, LINK. This is owed partially because of the Aave leveraging the decentralized oracle services of Chainlink to gather off-chain data, with pricing and lending rates. The significance of running secure oracles was made obvious in June of 2019 after the mishap on the DeFi application Synthetix.
What happened was that an arbitrage bot on the platform took advantage of the false external data that was transmitted to the smart contracts of Synthetix. This error had the consequence of losing 37 million synthetic Ethereum (ETH). This sum was replaced at a later time after the negotiations with the owner of the bot. Kain Warwick, the founder of the company said:
“This particular bot was able to take advantage of the mispricing issue immediately, and exploit it repeatedly.”
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