Blockchain platforms, like Ethereum, can be used for a variety of innovative decentralized finance (DeFi) tools, such as decentralized trading or lending. To do so, these applications need access to up to date cryptocurrency prices. Yet if they use a centralized third party, there’s a risk the data could be compromised or tampered with by the provider–and it makes decentralized apps, well, more centralized.
Instead, Chainlink offers a decentralized way to connect to a data source. It uses a network of oracles (that connect to the data source) to ensure that no single party has control over the data provided.
Now, Chainlink is compatible with Binance’s data feeds. This means that DeFi applications can use Chainlink to receive accurate, real-time price data in a decentralized way–although it doesn’t guarantee Binance’s data is accurate.
Chainlink has already integrated with both CoinMarketCap and CryptoCompare, two of the largest crypto price trackers. But both of these are third parties that scrape data from exchanges—providing a potential weak spot in the collection of unadulterated data.
Following the announcement, the price of Chainlink’s native token, LINK, rose 5 percent, from $1.93 to $2.03. However, a couple hours later, the price dropped to $1.90. Maybe they’re linked; who knows?