May 13, 2021 – Tel Aviv, Israel
Orbs, the project at the nexus of enterprise and DeFi, is integrating with tamper-proof Chainlink price feed oracles to secure its unique, single-sided exposure, yield-generation protocol, the Liquidity Nexus.
Liquidity Nexus is the DeFi protocol that lets different counterparties split the potential rewards, as well as the risks from impermanent loss, when providing liquidity on automated market maker (AMM) exchanges like Uniswap. Normally, most farming incentives rely on pool tokens, which require users to divide their capital into two separate assetsfor example, Ether and USDC.
Such exposure profiles force ETH holders to sell a portion of their assets to enter the pool, thus potentially missing out on more than half of the gains they would have if they simply held onto the Ether. At the same time, many asset managers prefer remaining exposed only to USD and collect a safe and predictable yield, but the pool token mechanism leaves them unable to do so.
The Liquidity Nexus matches crypto bulls with USD holders to clearly separate the risks. Crypto holders remain fully exposed to their asset, while USD liquidity providers do not take undesirable crypto exposure. The combined pool of funds is then sent into the AMM pools to earn yield by facilitating cryptocurrency swaps.
Due to the mechanism of impermanent loss, there could be situations in which one party’s crypto exposure changes as the price of the asset moves. Since this is an expected phenomenon, Liquidity Nexus is set up so that cryptocurrency holders bear the brunt of the impermanent loss while collecting a larger portion of the yield. Due to the benefits of single-sided exposure, impermanent loss is unlikely to make a deeper cut into their profits than the alternative of splitting their assets before providing liquidity.
Price manipulation attacks can nonetheless cause serious issues for the Liquidity Nexus system, creating situations where one side of the pool may be drained due to very sudden and sharp drops or rises of an asset’s price. These types of attacks have resulted in tens of millions of dollars in losses for DeFi protocols relying on single-source oracles. Facilitated by flash loans, an unlimited instant loan, malicious actors easily manipulated some individual markets that oracles relied on to find pricing data on assets to steal funds.
Chainlink is the leading oracle provider that effectively protects against market manipulation by aggregating from hundreds of data sources. Attacks on a particular DEX do not affect Chainlink as it has countless other CEXs and DEXs to read accurate data from. No protocol using Chainlink has seen a flash loan-based exploit so far.
Daniel Peled, founder of Orbs, said,
“The Liquidity Nexus is a revolutionary idea for DeFi, creating a platform of risk tranching that clearly divides risks between USD and crypto holders. We wanted to mitigate the vulnerability to oracle attacks, which wreaked havoc on the DeFi ecosystem. We are excited to announce the integration with Chainlink, a proven oracle network, to eliminate this dangerous attack pathway for the Liquidity Nexus.”
Orbs is a public blockchain infrastructure designed for mass usage applicationsoffering developers a proper mix of performance, cost, security and ease-of-use. The Orbs protocol is decentralized and executed by a public network of permissionless validators using proof-of-stake (PoS) consensus. Founded in 2017, Orbs is being developed by a dedicated team of more than 30 people out of its offices in Tel Aviv, Israel, Singapore, Tokyo, Japan and Seoul, South Korea. Orbs was named Gartner’s “cool vendor in blockchain technology” for 2018.
Orbs has been particularly active in the DeFi space and is heavily involved in funding and supporting upstart DeFi projects, both through an in-house grants program and the DeFi.org accelerator, launched in 2021 as the result of a collaboration with Binance, with its latest push into the DeFi space being the launch of the Liquidity Nexus.
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