TLDR
We propose adding RedStone Oracles to the current Venus Oracle Interface thus increasing the reliability of BNB price feed free of charge. In the long run, it would also allow Venus to spin up new markets with Price Feeds delivered by RedStone, based on the demand.
BACKGROUND
Oracles are the backbone component of DeFi apps but their lack of responsiveness to new narratives and needs as well as high gas cost structures are major bottlenecks. Protocols wishing to expand quickly in terms of new markets, new ecosystems, and new mechanisms are limited in what they can do as well-established oracle providers are tied to the legacy infrastructure and slow or reluctant to deliver requested feeds.
As we see while talking to some of the best builders in this space - the need for more oracle flexibility is rapidly growing. It is surely going to be of utmost importance in the context of Isolated Lending Pools introduced in Venus V4. RedStone would be the best-suited technological and business Oracle partner for Venus both, as a 2nd line oracle for existing markets, significantly increasing Venus Protocol’s reliability via having multiple price providers, and in the future as a primary oracle for new markets.
Our tech-first approach allows us to provide Price Feeds for bluechip assets, LP and staked tokens and numerous less-standard tokens. Currently, we support +1100 Price Feeds and after the launch of Isolated Lending Pools Venus users would be able to leverage the upside of RedStone feeds’ diversity by creating new markets in a permissionless way.
RedStone would also allow Venus to go beyond just traditional assets. To give an example - we now devote a lot of our focus to creating Price Feeds for yield-bearing tokens. Lately, we have seen a lot of demand for using LP tokens from your favourite DEXs or LSTs as collateral for Lending Markets. Protocols that implemented this feature with us benefit from tons of unlocked composability and a vast variety of new investment strategies now accessible for the users.
Going into the future - during our conversations the Venus Team expressed the need for the protocol to progressively move towards the On-Demand Oracle model allowing for low-latency updates and significantly increased price accuracy. RedStone has been working on the On-Demand model (called RedStone Core) for the past 2 years now and has the most technologically advanced solution of that kind on the market, already used on mainnets to secure millions of dollars in real value.
Implementing RedStone Core would give Venus many benefits. Low latency of Price Updates ensures the protocol has access to the latest possible collateral price, and allows for higher LTV values and higher pools utilisation leading to better capital efficiency as well as the implementation of leverage. Besides, On-Demand Oracles bring even greater possibilities in terms of adding new assets and the ability to use the exact same feeds while expanding to other ecosystems/subchains.
We are convinced that Isolated Lending pools will give Venus a competitive advantage and become the most complete lending market in DeFI. However, for that to happen, Venus needs an oracle able to fulfil the need for innovation. We are strongly convinced that RedStone is just the right partner for that.
PROPOSAL
- To add RedStone Oracles to the current Venus Oracle Interface.
- To implement RedStone’s BNB price feed with a 0.5% Deviation Threshold as a fallback oracle.
INTEGRATION DETAILS
Step 1
After our discussions with the Venus Core Team - Our proposed flow of integration starts with the Classic Oracle interface (Our Classic Model). This interface works in a similar manner to how classic oracles like Chainlink work. That means that no changes to the code logic are required on the Venus side to integrate RedStone.
The difference between RedStone and other Oracles in that model? Most importantly - Venus can now list way more assets than before.
Also:
- Customisable parameters of Heartbeat and Deviation,
- Full transparency in terms of chosen Data Sources and Data Aggregation methods
- RedStone takes care of the end2end infrastructure maintenance and development, allowing the protocol to fully focus on the core business without adding additional overhead in terms of risk and developer resources (as opposed to other oracle providers, pushing part of the infrastructure maintenance on the protocol).
to achieve the highest level of security for all supported assets.
After Step 1 is done, the Venus Protocol <> RedStone Oracles integration is fully completed.
Step 2 is all about making things more effective and creating a long-term Competitive Edge for Venus.
Step 2
Going further into the future - Venus Core Team sees a lot of value in the On-Demand Oracle approach. In Step 2 RedStone’s focus would be on working hand to hand with the Venus Core Team to prepare the most effective implementation of the RedStone Core On-Demand model, tailored to the protocol’s specific use case.
VALUE REDSTONE BRINGS TO THE TABLE
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Adding new assets quickly in response to current market trends
In order to stay competitive, Venus has to move fast and be able to position itself against the new narratives quickly. For standard oracles, the listing process of a new token usually takes 6-9 months (if they decide to list a particular token at all).
Quickly spinning up new markets and providing new asset types (e.g. yield-bearing tokens). Integration with RedStone would be a major step towards unlocking the full potential of the Isolated Lending Pools. -
Tailoring the Oracle Infrastructure to Venus Protocol’s needs
Never the other way around. RedStone = custom solutions and working shoulder to shoulder with Builders. With us, Venus could significantly improve the price accuracy by plugging in the On-Demand model (integrating with the Classic oracle model first and gradually migrating to full On-Demand). Besides, integration with RedStone opens up many possibilities for experimenting with new types of data aggregation mechanisms, methods of injecting data to the chain, custom flows of liquidation/opening a position, risk mitigation mechanisms etc. going towards the next versions of the protocol in the future. -
Competitive Advantage for Venus over other Lending Markets
Making novel use cases possible and unlocking maximal composability and capital efficiency for the Users is at the heart of what we do at RedStone. We are fully committed to providing Venus Protocol with the data needed to build a strong Competitive Edge against other lending markets, including transitioning to the On-Demand Oracle model in the future. -
Increased security
Nodes operating in standard oracles networks do not reveal their Data Sources and their Data Aggregation methodology publicly. This means that the protocol is never sure where the data comes from and how it is calculated. Possible risk factor? Most of the standard oracles nodes use the exact same data sources and the same methodology. This means that the price they deliver could be fairly easily manipulated even for relatively large liquidity tokens.
RedStone takes the opposite approach with transparency in terms of Data Sources and Data Aggregation methods as well as adjusting these parameters to the protocol’s specific use case and risk profile. This also makes us a perfect 2nd line oracle for Price Feeds already provided by other oracles like Chainlink as we can provide a completely different Data Aggregation methodology hence minimising the risk of an oracle manipulation. The LUNA incident (Official Statements from Venus can be found here, here and here) shows that redundancy is crucial in the face of extreme market conditions and having a single oracle provider is often not enough.
IMMEDIATE NEXT STEPS
To kick off the cooperation, we propose that RedStone starts providing the Price Feed for BNB as a backup oracle. We perceive Venus as an important strategic partner and therefore we are willing to cover all costs associated with the feed (setup, maintenance, gas costs of the price updates etc). Moreover, our team has already done the necessary preparations - everything is ready on the tech end, we are now waiting for the green light from the DAO.
APPENDIX - WHY REDSTONE?
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RedStone’s modular oracle infrastructure offers the ability to quickly create new markets for a broad spectrum of tokens and customizability unachievable with other Oracle providers. A great example here would be DeltaPrime (under-collateralised lending protocol on Avalanche). Our novel feeds for LP tokens and staked tokens allowed them to get a leadership position in the Avax ecosystem. Since our production launch in January this year, we managed to gain almost $200M TVS in the bear market, which makes us one of the fastest-growing Oracles.
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A protocol using RedStone Oracle has full clarity and transparency in terms of data sources, and origins of the consumed Price Feeds and can adjust these to its specific use case.
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RedStone has been developed & tested since Dec 2020, on mainnet (including BNB) since March 2022, is well audited and secures real funds across multiple ecosystems.
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RedStone is also backed by some of the most prominent builders in the space including Stani Kulechov (Founder Aave & Lens), Sandeep Nailwal (Co-Founder Polygon), Alex Gluchovski (Co-Founder zkSync), Emin GĂĽn Sirer (Co-Founder Avalanche) and others. (Full list of our Angel Investors can be found here.)
CONCLUSION
As stated, we remain fully committed to collaborating closely with the Venus Core Team as well as the DAO to make sure the protocol keeps pushing for innovation and has a strong Competitive Advantage and becomes the most complete lending market in DeFi.
