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Trader Joe Uses Chainlink Price Feeds to Support Rapid Scaling in Avalanche's Fast-Growing DeFi Ecosystem

"In Chainlink, we have a secure and scalable oracle mechanism that can accommodate the Trader Joe ecosystem’s rapid TVL growth."

0xMurloc

Co-founder, Trader Joe

Key results

during the first 50 days after Banker Joe’s launch

$1.6B+

supplied and nearly $1B borrowed

20,000

visits per day

100%

Chainlink oracle uptime

Trader Joe is a leading decentralized exchange (DEX) on Avalanche. Banker Joe is a decentralized lending protocol built onto the Trader Joe platform.

Banker Joe offers investors the ability to lend or borrow against whitelisted assets, enabling the deployment of flexible DeFi investment strategies on the blazingly fast, low-cost Avalanche network. 

Situation

Trader Joe recognized a unique opportunity to bring a secure lending and borrowing solution to Avalanche’s DeFi ecosystem and built its own decentralized protocol, Banker Joe.

Challenge

To maintain solvency, DeFi lending protocols like Banker Joe require tamper-proof, off-chain asset price data to securely issue, close, and liquidate loans at accurate fair-market prices.

Solution

Trader Joe’s lending platform Banker Joe integrated Chainlink Price Feeds on Avalanche, helping secure its lending and borrowing operations and enabling it to quickly scale to accommodate surging demand from users.

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Situation

Trader Joe Looks to Establish a Foothold in Avalanche’s Promising DeFi Space

The blockchain industry is rapidly expanding into a multi-chain ecosystem consisting of hundreds of blockchains custom-built to support increasingly advanced decentralized applications. As more blockchains come online, developers quickly launch multi-chain support for their existing smart contract applications and build new solutions to meet user demand on emerging chains. However, new blockchain ecosystems typically lack access to the critical infrastructure and developer tools necessary to secure their applications.

Trader Joe is quite familiar with this issue. Founded in June 2021, Trader Joe aimed to create an innovative and unique DeFi platform on Avalanche’s high-throughput blockchain platform. Trader Joe initially released a decentralized exchange (DEX) but rapidly expanded to support novel yield farming and staking solutions. In October 2021, Trader Joe successfully launched its lending and borrowing platform, Banker Joe, enabling users to seamlessly lend or borrow whitelisted assets in order to deploy flexible DeFi strategies on Avalanche.

However, in the run up to launching Banker Joe, Trader Joe quickly recognized that it needed a secure market data solution to open, close, and settle loans in line with globally accurate fair-market prices. Since the Avalanche blockchain ecosystem is still developing, it was difficult for the Trader Joe team to find a reliable oracle solution that could bring high-quality market data to its application.

Challenge

Trader Joe Experiences Difficulties Accessing Reliable Market Data on Avalanche

  • Banker Joe needed tamper-proof oracles to securely issue, close, and liquidate loans

  • Creating its own oracles would be an extremely difficult and time-consuming task

  • Many available oracle solutions are subject to single points of failure

Accurate price data is a critical component of lending and borrowing protocols as it is used to open, settle, and liquidate loans. Unreliable price data could lead to improperly calculated collateral ratios, leading in turn to significant user or protocol loss with no available recourse. To avoid this problem, the Trader Joe team considered developing its own oracle solution. However, this presented numerous challenges. Not only would Trader Joe need to divert developer resources to build the oracle network, but developers would also need to constantly maintain and upgrade the oracles to ensure they worked as intended. As this was not a realistic solution, the Trader Joe team turned its focus to existing oracle solutions available on Avalanche.

While carefully reviewing available oracle providers, the Trader Joe team realized that many solutions were prone to single points of failure or used manipulable data and pricing methodologies. Take for example centralized oracle providers: An attacker simply needs to exploit a single data source, delivery mechanism, or network to manipulate the reported price. Meanwhile, other oracle solutions use free APIs that frequently go offline or use time-weighted average price (TWAP) methodologies that provide stale pricing during periods of extreme market volatility.

Ultimately, Trader Joe needed an accurate, time-tested oracle solution with a high degree of security, one that could scale alongside Banker Joe as it captured more value.

“Many people overlook the importance of oracles in their smart contract application. The reality that we see time and time again is that a smart contract application’s security is only as strong as its oracle. That’s why it was so important for our team to find an oracle that matched Trader Joe’s strong commitment to security.”

0xMurloc

Co-founder, Trader Joe

Solution

Banker Joe Integrates Chainlink Price Feeds, Is Able to Quickly Scale

Trader Joe integrated Chainlink Price Feeds into Banker Joe to bring high-quality market data to its lending and borrowing platform. Rather than designing, building, and maintaining its own oracle solution, Trader Joe was able to quickly integrate Chainlink Price Feeds for hyper-reliable, decentralized market data. Chainlink Price Feeds feature best-in-class security guarantees as they are run by independent, security-reviewed node operators made up of leading DevOps teams, data providers such as Accuweather and the Associated Press, and enterprises including T-Systems, Swisscom, and LexisNexis. Moreover, Chainlink Price Feeds source volume-weighted data from multiple premium aggregators for comprehensive market coverage during extreme market conditions.

Another unique benefit of Chainlink Price Feeds is that they are decentralized at the data source, node, and oracle network layers to help protect against single points of failure, black swan events, and data manipulation attacks using flash loans. Unlike other oracle providers, Chainlink oracles can manage API keys and account logins, allowing them to access premium data sources with the highest uptime and data quality. Due to their unique benefits, Chainlink Price Feeds already secure $75B+ in value for leading smart contract applications across multiple blockchains.

“With Chainlink Price Feeds, Banker Joe now has a time-tested and battle-hardened oracle mechanism that further protects user loans against faulty liquidations due to common DeFi exploits.”

0xMurloc

Co-founder, Trader Joe

Business Outcomes

Banker Joe Becomes a Leading DeFi Protocol on Avalanche

After Trader Joe’s integration of Chainlink Price Feeds into Banker Joe, it quickly became a leading lending and borrowing platform on Avalanche—a notable feat for a project that originally mainly focused on building secure DEX technology. In the first 50 days after launch, users deposited $1.6B+ and borrowed nearly $1B through Banker Joe. Moreover, Chainlink Price Feeds have had 100% uptime on Avalanche even during periods of marketwide volatility, a testament to the hyper-reliability provided by Chainlink’s decentralized architecture.

With Chainlink Price Feeds, Banker Joe can efficiently scale its lending and borrowing protocol. Banker Joe is able to seamlessly connect to Chainlink Price Feeds covering dozens of off-chain and on-chain assets, such as various cryptocurrencies, stablecoins, forex pairs, commodities, indexes, and more. Through a single integration, Trader Joe was able to combine the security and reliability of Chainlink Price Feeds with Avalanche’s high-throughput and low-cost architecture to create innovative new DeFi solutions in record time.

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