Hedge Uses Chainlink Price Feeds to Help Secure Interest-Free Loans on Solana

“By integrating Chainlink Price Feeds on Solana, Hedge is able to offer its users interest-free loans that are supported by price oracle infrastructure that is highly resistant to manipulation.”
Chris Coudron

Co-Founder and CTO, Hedge Labs

Key results

$2M+
TVL secured
1
seamless integration for all market data
100%
Chainlink oracle uptime

Hedge enables users to take out 0% interest loans for a one-time fee by depositing collateral to mint USH, a stablecoin soft-pegged to the US dollar. Users are incentivized to keep their collateral-to-debt ratio above 110% to avoid liquidation. When an undercollateralized vault is liquidated, users who deposited USH in a stability pool receive discounted collateral as a reward. USH is redeemable for the value it represents.

Situation

Challenge

To maintain solvency, Hedge needed a secure source of price data to be able to liquidate loans in a timely manner.

Solution

Hedge integrated Chainlink Price Feeds to help secure its interest-free loans and enable the protocol to efficiently scale.

Business Outcomes

Hedge was able to efficiently scale its platform and combine the high-throughput and low-cost architecture of Solana with the security and reliability of Chainlink.

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Challenge

Hedge Aims To Build an Interest-Free Borrowing Protocol Backed by Tamper-Proof Price Data

  • Hedge needed reliable oracles to help securely open and liquidate loans.
  • Using centralized oracles would expose the protocol to a single point of failure.
  • Building and maintaining its own oracle infrastructure would require significant in-house development resources.

Part of the emerging DeFi ecosystem on Solana, Hedge is an interest-free borrowing protocol that allows users to mint the stablecoin USH against posted collateral, most commonly SOL. Hedge’s competitive advantage comes from its 0% interest rate and low collateralization requirement of 110%. To ensure protocol solvency and secure the collateralization of USH, Hedge needs reliable and up-to-date price feeds in order to open and liquidate positions. Timely liquidations are an especially important consideration due to the low collateral ratio requirement on the platform.

Hedge also offers a redemption feature that allows users to redeem their USH for the underlying collateral value—a mechanism that aims to help maintain USH’s peg. Reliable price feeds are required for redemptions to be executed according to the accurate value that borrowing positions represent.

“We were looking for an oracle solution that is able to leverage Solana’s fast network speed and low transaction costs. Chainlink Price Feeds are the ideal solution for fast and reliable market data.”

Chris Coudron
Co-Founder and CTO, Hedge Labs

Solution

Hedge Integrated Chainlink Price Feeds to Help Secure Tamper-Proof Loans

Hedge needed a time-tested, decentralized oracle solution with a high degree of security that could scale alongside the protocol as it captures more value in the Solana ecosystem. After reviewing various options, the Hedge team decided to integrate Chainlink Price Feeds to source high-quality price data to help secure its borrowing platform.

Chainlink Price Feeds are the industry-standard price oracle solution in DeFi, already helping to secure tens of billions of dollars of value across 12+ blockchain networks and hundreds of applications. Developers can leverage Chainlink Price Feeds for high-quality, decentralized, and near real-time price updates, enabling them to build next-generation smart contract applications that provide superior performance and strong risk management guarantees. With data sourced from premium APIs through a three-tier aggregation system, Chainlink is the go-to choice for many of the highest-value DeFi protocols in the blockchain industry.

“The Chainlink Labs team is highly proficient and helped make the integration process quick and seamless. We’d happily work with them again!”

Chris Coudron
Co-Founder and CTO, Hedge Labs

Business Outcomes

Hedge Can Scale More Quickly and Efficiently Without Having to Compromise on Oracle Security

Chainlink Price Feeds are now a fundamental component of Hedge’s decentralized borrowing platform. With secure pricing infrastructure underlying Hedge’s borrowing positions, users are able to more confidently make use of the protocol to unlock liquidity and use USH for payments or as collateral in Solana dApps.

Chainlink Price Feeds also saved the Hedge team significant development resources, as they were not required to design, build, and maintain their own oracle infrastructure, allowing them to spend more time improving the core business logic of the protocol. As Hedge continues to scale its platform with plans to add more collateral types to borrow against, the battle-tested infrastructure of the Chainlink Network and its vast collection of market data feeds gives the Hedge team confidence that the protocol will be able to meet the growing demand for interest-free loans in the Solana ecosystem.

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