Defi (DEFI)
$0.045999 (-58.39 %) View coin
23 April 2020

Coinbase looks to reduce DeFi attacks with new price oracle

Coinbase announced a new Coinbase Price Oracle that enables anyone to use their API to get signed price data for BTC-USD and ETH-USD. The feed is sourced by Coinbase Pro and updates every minute. It also allows anyone to verify the authenticity of the data and publish themselves using the Coinbase Price Oracle public key.

Why it matters - Oracles are a mission-critical function within decentralized finance as they are used for lending, margin trading, liquidations, and more. And as we’ve seen with the second bZx hack, oracles can act as an attack vector for anyone looking to siphon funds from DeFi protocols. However, if more robust pricing inputs are available through services such as Coinbase Oracle, these types of attacks can be prevented - The oracle problem has been a difficult one to solve as there is a balance between trustworthiness and decentralization. You can publish price data from an exchange but are then trusting them to provide accurate data and keep the signing key safe, or alternatively, you can use a decentralized exchange but then are subject to manipulation. There are various also protocols that attempt to solve this issue, the most notable being Chainlink, which introduces a token to incentivize accurate feeds. If Coinbase’s Price Oracle is able to provide correct prices without the need to directly trust them then it could reduce the need for those cryptoeconomic oracle models.

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