Celsius integrates Chainlink Oracles for transparent pricing

The Celsius platform provides a range of financial services to holders of crypto assets. Users can deposit their assets with Celsius and earn interest rates significantly above rates offered by banks. Users can also use their assets as collateral to receive loans in either crypto or fiat currencies. Celsius was founded in 2017 by Russian born tech entrepreneur Alex Mashinsky.

Mashinsky is best known for inventing the VOIP protocol which enables 1B people to talk over the internet at no cost. On Brave New Coin’s Crypto Conversation podcast, Mashinsky said that “In the same way that VOIP disrupted the Telecom companies, my goal now is to disrupt legacy banks with Money Over IP. That is what Celsius does, it empowers crypto people to unbank themselves.”

Celsius completed an initial coin offering in 2018 raising $50 million. Celsius competes with decentralized lending platforms such as Aave and Compound, and other centralized crypto platforms such as BlockFi. The Celsius model is to borrow from one group of entities and then issue crypto collateral-backed loans to users seeking loans. The platform makes a profit on the difference in interest. Mashinsky has stated that 80% of the revenue generated is paid to users with the remaining 20% going to Celsius.

The integration of 35 of Chainlink’s Decentralized Price Feeds will power internal Celsius systems as a key component of its pricing services. The 35 Chainlink Price Feeds are for many of the leading cryptocurrencies, stablecoins, and FX rates.

Mashinsky says the partnership with Chainlink is a step towards the gradual decentralization and increased transparency of the Celsius platform. “Instead of completely overhauling our successful business model, we are able to use Chainlink to decentralize critical pieces of our systems like pricing, monitoring, and in-app functions, while retaining the same lucrative benefits afforded to Celsius users, such as weekly rewards and low cost loans,” he explained.

Chainlink’s price feeds now power several components in the Celsius ecosystem, including within the Celsius Explorer App enabling users to check their balances and transactions, in their back-office systems to price cryptocurrencies when determining lending/borrowing rates, and upcoming integrations that will calculate users’ weekly rewards and provide up to date Ethereum gas prices.

Celsius CTO, Nuke Goldstein says, “Pricing is a potential attack vector and we take it seriously. The integration of Chainlink’s secure oracles is an important addition to strengthen our fortifications, along with providing our users with heightened levels of transparency on the price feeds powering our financial products and services.”

What is ChainLink?

ChainLink (LINK) is a decentralized oracle network built on Ethereum. The network is designed to connect off-chain data sources, such as APIs, data feeds, or bank payments, to on-chain smart contracts. It has become an increasingly integral part of the crypto lending ecosystem, in both decentralized and centralized players. The LINK token has been one of the best performing crypto assets over the past 24 months as a wave of companies continues to announce new Chainlink integrations. Its network currently secures billions of dollars in value for smart contracts across the decentralized finance (DeFi), insurance and gaming ecosystems.

The integration with Celsius means that the platform’s users can earn interest on their assets and be confident that the prices and rates provided are fair and transparent. This is especially attractive when compared to the opaque services in legacy banking.

Mashinky said there were several reasons why Celsius selected Chainlink for the pricing data. “We know that Chainlink sources its price data from a multitude of premium data aggregators like Amberdata and Brave New Coin,” he said. “It means the price feeds have strong market coverage across all trading environments without relying on one single source of truth. Chainlink is a market leader in providing trusted oracle solutions, and we are excited to be able to leverage it to continually improve our products by increasing transparency and enabling the onboarding of the next generation of users looking for high yields and new revolutionary financial services.”

The news follows an announcement in April that Celsius would hold several million dollars worth of Chainlink’s crypto assets in its interest-bearing wallets. This meant that Celsius was providing a secure treasury service to Chainlink, which is able to earn interest on its assets, as well as being able to borrow dollars if needed, without the need to sell assets. This is the same service available to both individuals and companies with a need to earn interest or borrow against their crypto assets without wanting to sell them.

Mashinsky confirmed that integrating Chainlink’s decentralized oracle technology was a key step in the move towards increasing the decentralization of Celsius.

“Partnering with Chainlink helps solidify our mission to bring revolutionary financial services to millions around the world, in a fair, and transparent manner. Furthermore, we are pleased to provide treasury management for Chainlink, giving them secure custodial services and interest-bearing opportunities.”

To begin the partnership, Celsius integrated Chainlink’s decentralized price oracles to calculate interest payment amounts to its users in a more decentralized, transparent and secure approach that created a smart contract audit trail of its lending operations. Celsius interest payments now rely on the increased security of a decentralized network of independent, security reviewed, and Sybil resistant Chainlink nodes.

Chainlink has been busy in 2020 working with a number of projects in the CeFi and DeFi space. Its decentralized oracle network enables smart contracts to securely access off-chain data feeds, web APIs, and traditional bank payments. After the price data and flash loan exploits in February, Chainlink’s oracles are part of the solution to price data manipulation attacks in the DeFi ecosystem.

Chainlink Price Feeds in use on Celsius are the USD exchange rates for ETH, BTC, DASH, BCH, BSV, LTC, ZEC, XRP, BTG, XLM, OMG, TUSD, GUSD, PAX, USDC, DAI, CEL, ZRX, ALGO, LEO, EOS, SAGA, GBP, AUD, HKD, CAD, XAU, ETC, BAT, BUSD, KNC, LINK, LPT, MATIC, and SNX.