Proposal: Increase robustness of feeds configuration

Voting ended 11 months agoSucceeded

Summary

This proposal aims to increase the robustness of the protocol by adding Binance Oracle as FALLBACK for major markets - BNB and BTC on BSC.

Current Oracle Setup

MAIN - RedStone

PIVOT - Chainlink

FALLBACK - Chainlink

Proposed Oracle Setup

MAIN - RedStone

PIVOT - Chainlink

FALLBACK - Binance Oracle

Benefits

1/ Increasing robustness of the oracle setup

The reasoning behind the ResilientOracle Infrastructure is to improve the robustness of data provision by relying on multiple providers acting in three different roles (main, pivot and fallback). The current solution with just two Oracles only partially benefits from this design and doesn’t fully mitigate the risk involved in the old single oracle setup. Given historical incidents with a single provider (e.g. the Luna crash), implementing the Resilient Oracle design Venus could fully eliminate similar vulnerabilities in the future.

2/ High latency in turbulent markets:

Example - a price crash on the 5th of August 2024:

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On-chain updates of BTC feed from RedStone (red), Binance (yellow), Chainlink (blue)

2/a - Ensuring timely liquidations

The data shows Chainlink lagging behind in periods of high volatility. If Binance Oracle was to be set up as the FALLBACK, it would allow for circumventing the Chainlink’s delay and make sure the protocol can liquidate in time when the markets are volatile.

2/b - Reducing the risk of bad debt

Venus Protocol, by default, takes 5% of the liquidation bonus, leaving 5% for the liquidators. If the price drops more than 5% during the delayed price update the liquidation may become unprofitable increasing the risk of bad debt

2/c - Generating more revenue for liquidators

The liquidators earn by being able to “quickly” sell off assets whose value decreases. Any delays will make the operation less profitable. Higher profits for liquidators will not only ensure healthy competition but could also pave the way for sharing the revenue with Venus protocol in the future.