Chainlink partnership with Celsius Network to strengthen its security and reliability for lending services
Crypto’s largest price oracle, Chainlink, is moving into the custodial crypto landscape. Celsius Network will integrate Chainlink to fence in decentralized price feeds, and Chainlink will use Celsius’s unique treasury system to manage its crypto assets.
.@CelsiusNetwork, an industry leader with $600MM+ in assets under management, will be relying on Chainlink’s decentralized price oracles for their core offering’s interest rate calculation. Providing more decentralization and transparency for their users.
— Chainlink – Official Channel (@chainlink) March 30, 2020
Chainlink fence in reliable data
Chainlink has partnered with billion-dollar organizations like Google and Intel, but this is the first case to partner with custodial cryptocurrency service.
The Celsius Network is a financial platform that pays users to deposit and lend deposits to electronic loan institutions to invest. Established in 2017, Celsius is one of the major crypto lending platforms and has added a number of digital currencies to its offering list over the years. The platform also raised $50 million in 2018, showing the market appetite for such services.
Celsius will now be leveraging Chainlink price feeds to calculate interest payments due to customers as well as payments to be received from borrowers. This pricing data provides an auditable trail for borrowers and lenders because it is on a public blockchain.
This partnership will give potential customers more confidence in the system, as interest calculations are made using publicly verifiable data. Furthermore, Chainlink will have access to Celsius’s treasury management solution.
Alex Mashinsky, CEO of Celsius Network, stated:
“Integrating Chainlink’s industry-leading decentralized oracle technology is the key step in the continued decentralization of Celsius. Partnering with Chainlink helps solidify our mission to bring revolutionary financial services to millions around the world.”
Sergey Nazarov, the co-founder of Chainlink, added:
“We are excited to work with an industry pioneer like Celsius, backed by a highly experienced technical team of successful entrepreneurs. We are very excited about working with Celsius to quickly and efficiently achieve increased decentralization in their system, which will benefit both their overall security and their users’ overall interest payment returns over the long-term.”
Sergey Nazarov, the co-founder of Chainlink
A portion of Bitcoin and Ether held by Chainlink will be deposited into the Celsius Network to make a high profit. Current ratios for BTC and ETH are 3.92% and 2.33%, respectively. Lending ETH on Compound or Aave, other decentralized lending options, will yield only 0.02%.
The rate on Celsius tends to be higher than DeFi because of the higher perceived risk. On Compound, at least, a lender is guaranteed their initial capital thanks to excessive collateral.
However, because Celsius is a monitoring solution, they can use capital more efficiently by avoiding excessive collateral.
Celsius offers lending and borrowing in various cryptocurrency assets, including some stablecoins. LINK is not currently integrated into Celsius, but that may change with this partnership. If this becomes a reality, LINK holders may have a new market to lend their stagnant coins. And these prices may be better than most DeFi platforms.
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