Tulip, a yield aggregation and leveraged yield farming protocol, announced today that it is integrating Chainlink Price Feeds. By integrating the popular Oracle network, Tulip has access to a high quality, tamper-evident source of financial market data needed to secure positions in leveraged yield farms. This gives both lenders and borrowers greater assurance that risky positions will be properly liquidated.

“We selected Chainlink as our oracle solution because of its no-compromise approach to security and reliability, as evidenced by its verifiable history of accuracy and resilience to extreme market volatility, exchange / API downtime, and data manipulation attacks like flash credit. In addition, Chainlink can publish price feeds on Solana oracle updates in the chain in seconds and with full market coverage to further ensure that price data reflects real-time global market conditions. “
– The tulip team

Securing liquidations with Chainlink price feeds

Tulip is a return aggregation platform operated by Solana and offers advanced, automatically assembled vault strategies. By leveraging Solana’s low-cost, high-speed blockchain network, earnings can often be reinvested in vault strategies.

Stakers then benefit from higher returns without the need for active management. Tulip also offers leveraged yield farming for users to increase their yield by depositing into two-sided liquidity pools.

The Leveraged Yield Farming platform aims to connect lenders – who earn an automatically compounded variable deposit rate – with borrowers who want to increase their income from income farming by borrowing additional assets that are then deposited on a farm.

When a leveraged yield farm position is opened, a user delivers and borrows against their collateral, depositing both assets into a liquidity pool to earn liquidity mining incentives and trading fees.

Opening a position results in the creation of a secured loan that must adhere to a pre-defined loan-to-value (LTV) ratio. If the value of the collateral falls below an uncertain level, the collateral is liquidated and sold to repay the lenders.

In order to settle when yield farming positions should be liquidated, Tulip needs pricing data to determine the value of both the collateral and the loaned assets used to calculate the LTV ratio.

However, due to the blockchain oracle problem, smart contracts cannot natively access off-chain data such as aggregated market prices. Smart contracts require additional infrastructure called an oracle to pull external data and return it back in the chain.

Because liquidations play such an important role in managing the risk of the platform, Tulip’s Oracle solution must also aggregate from many Oracle nodes and sources to ensure accuracy, availability and tamper resistance.

After reviewing various Oracle solutions, the Tulip team found that Chainlink could offer the perfect blend of world-class data quality, robust Oracle security, and fast update frequency to ensure its liquidation mechanism follows the markets in real time.

Reasons to choose Chainlink price feeds are:

  • High quality data – The data comes from numerous premium data aggregators and provides price data that is aggregated from hundreds of exchanges, weighted by volume and refined based on outliers and suspicious volumes.
  • Safe node operators – Independent, security-cleared and Sybil-resistant oracle nodes operated by leading blockchain DevOps teams, data providers and traditional companies ensure reliability, even with high gas prices and extreme network congestion.
  • Decentralized network – Decentralized at the data source, Oracle node and Oracle network level, Chainlink offers strong protection against downtime and manipulation either by the data provider or the Oracle network.
  • Blockchain agnostic – Chainlink’s Oracle networks operate at the native speed of the chain, where data is delivered without interdependencies from other blockchain networks. Chainlink Price Feeds on Solana have no dependencies on other chains, which enables high-frequency updates at lower costs.
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