Coinbase rolls out Price Oracle to minimize DeFi risks

Coinbase, a leading US-based crypto exchange has launched a data feed for providing crypto prices. The exchange rolled out this feature dubbed Coinbase Price Oracle on April 23. Per Coinbase, Price Oracle has several applications including the construction of novel derivatives, algorithmic stablecoins, or liquidate debt positions. The exchange unveiled that this launch was triggered by the need for market data by decentralized finance (DeFi) platforms.

Reportedly, the feed works by fetching data from Coinbase Pro. It offers the price information of bitcoin (BTC) and ether (ETH) against the US Dollar, and the data updates automatically after every minute. Through this initiative, Coinbase believes that it will help make the DeFi ecosystem safe and reduce systemic risks. On top of this, the exchange projects that Price Oracle will play a significant role in unlocking the next wave of growth and adoption.

Coinbase will sign the feed with a private key

Coinbase will reportedly sign the feed with a private key. This step will assure the authenticity of data when shared across third party services and protocols.

Commenting on the importance of Coinbase Price Oracle, Robert Leshner, the CEO of Compound said,

“Coinbase Oracle will increase the security and decentralization of Compound’s price feed, which is mission-critical to the protocol and the ecosystem of applications built on top of Compound. We’re not alone — the rest of DeFi will benefit with faster development, consistent data, and shared standards.”

Echoing Leshner’s remarks, Antonio Juliano, the CEO of dYdX said,

“A Coinbase Price Oracle will be hugely impactful for the DeFi ecosystem — price oracles are used in every lending & derivatives protocol. Coinbase is uniquely positioned to provide oracle prices as they’re the most trusted and secure institution in the space. These prices can be used as an input to help create more decentralized and secure price oracles for the ecosystem.”

Coinbase Price Oracle will help prevent price manipulation

This news comes after Bitwise Asset Management reported in 2019 that 95 percent of all reported BTC volume is faked. With such manipulation, the crypto market requires reliable sources of price data. To help prevent price manipulation by exchanges or the use of invalid data, Coinbase Price Oracle leverages the same technology that Coinbase uses to secure its customers’ funds.

Do you think the launch of Coinbase Price Oracle will help end price manipulation in the crypto market? Share your thoughts in the comment section below.