DeFi lending and trading protocol bZx announced their plans to integrate ChainLink, Band Protocol, and Uniswap v2 as price oracles. The news comes a few weeks after the protocol was hit by two consecutive attacks.
Oracle Solutions Imperative to DeFi Resilience
When bZx was attacked for the first time, everyone’s first reaction was to assume it was a result of a poor oracle.
Although this turned out to be false, they were quickly hit by a second attack – this time it was the result of an oracle deficiency.
A clever DeFi trader managed to take advantage of bZx’s use of Kyber price feeds as an oracle. Initially, the team behind the protocol believed that this wouldn’t result in any vulnerabilities so long as they used the mid-point from both sides of the spread (bid and ask).
However, upon re-evaluating this belief after the attack, DeFi’s most revered bug hunter, Sam Sun, found this to be insufficient, as there were quirks to the system an attacker could use to manipulate price feeds.
The bZx team has sought to improve, and this is evident from their recent move to integrate ChainLink. Now, they have decided to kill their dependence on a single oracle provider, announcing future iterations that will combine ChainLink, Band Protocol, and Uniswap v2.
Band Protocol is an oracle solution dependent on individual nodes that query data, much like ChainLink.
bZx’s decision to integrate two different oracles boils down to protective measures. The protocol’s reputation was damaged by recent attacks, so it only makes sense to double down on securities and plug every possible hole.
The native token for Band Protocol (BAND) is up over 15% against Bitcoin at the time of writing.
For now, the protocol will rely on ChainLink as the sole oracle. Phase one of their oracle plan will then integrate Band Protocol in tandem with Chainlink. Phase two is slated to add Uniswap v2 to the alliance of oracles.
The use of Band and Uniswap v2 is still subject to analysis by bZx with no rigid timeline for deployment.
Currently, Uniswap is not stable enough to serve as a reliable oracle. However, Hayden Adam, founder of Uniswap, has stated that Uniswap v2 will bring in features that allow the DEX to act as an oracle too.
Resilient oracles can mitigate many attack vectors in DeFi. However, the use of two separate partners in ChainLink and Band could prove to be expensive for bZx.