Binance Partnership with Chainlink Promises to Support DeFi Growth

Binance Partnership with Chainlink Promises to Support DeFi Growth

Binance last week announced they will be partnering up with ChainLink Oracle to expand the growth of DeFi technologies with a particular focus on smart contracts.

As Binance pointed out the blog post announced the two firms would be working together towards this goal, smart contracts are reliant predominantly on the information they receive.  With this considered, in order for these contracts to expand they need to ensure that the data they receive comes from highly trusted and reliable sources. This is where Binance sees themselves within this partnership between them and Chainlink, a firm dedicated to the world of smart contracts.

How Binance can Benefit Smart Contracts and De-Fi?

In their role as one of the world’s largest cryptocurrency exchanges, they naturally have more access to such crucial data as that which smart contract rely on. This data is exactly what they can bring to the table and by providing this information to Chainlink, the accuracy of the smart contracts they provide inherently improve.

 As CZ Zhao, the CEO of Binance explains, “At Binance, we are committed to growing the blockchain ecosystem. 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.”

The core way in which this can be achieved is the API systems that Binance have in place. Their APIs provided the essential tool-kit to benefiting high-frequency traders by helping them stay up to date with information that is as accurate as possible which provides a clearer knowledge of how the market is operating.

This is furthered by the fact that Binance offer one of the largest number of coins and have a global presence, making them, as they put it, an “extensive breeding ground for 24/7 price discovery”. As they branch out into new projects, jurisdictions and derivatives, the benefits offer this will only be more and more true. All of which makes them essential in furthering DeFi.

Working in Unison with ChainLink?

Via this new partnership with ChainLink, the firm can bring these benefits to a wider audience and thus, benefit the market at large. Due to the nature of blockchain, they can not gain access to off-chain data, as this undermines their security benefits which is why many are built around tokenisation. However, this means the full spectrum of DeFi organisations, are slightly limited as they need access to off-chain information for their business processes.

Oracles are a solution to this as it can bridge this gap and one of the most well-known was created by Chainlink. In this new partnership Chainlink Oracle will gain access to Binance’s Binance’s data, use various aggregation strategies, and incorporate different security designs to maintain security. Essentially via a newly designed external adapter, ChainLink Oracle that allows node operator any node provide data. This will allow Chainlink to determine how they wish to connect with Binance’s API, which they can implement into a smart-contract.

The Results

One of the key benefits that can come as a result of this partnership is that DeFi applications could be used to make automated transactions on Binance reflective of predefined conditions.

These include peer to peer exchanges, market buys/sells, and even multi-user transactions. While via leveraging services on Binance, users could create customizable terms around more than 100 cryptocurrencies at a time facilitating new hedging strategies for assets outside of the current infrastructure that’s limited to top coins.

However, this is just for starters in terms of Automated trading as there is potential for these automatizations could be used in response to large transaction alerts, hashrate fluctuations, or automated portfolio adjustments based on market data. However, the potential that could from the partnership has been described as is “limitless”.

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