Stablecoins are backed by real fiat currencies that don’t really change in most cases- 1USD will always be 1USD no matter what. Asset-backed tokens like stable coins have made this quite easy, we now have blockchain-based coins that mirrors the price of various assets. But there is a slight challenge with fiat-backed coins/tokens and a huge bottle-neck to other asset-backed coins and tokens alike.
Are Stablecoins prices really stable?
Take for example stable coins like Tether (USDT), Paxos (PAX), etc., at some point, you can see that their price, despite been backed by USD, is supposed to remain 1USD for each unit. But this is not the case as the price is also slightly affected by the market forces, thus they range from 0.99USD or slightly lower to 1.01USD or slightly higher. This can be negligible if you are working with a smaller amount but the difference becomes visible when you have higher amounts. For other asset-backed coins, this problem is even bigger. For example, coins that are supposed to mirror prices on stock markets there seem to be no way to make these tokens worth or mirror the actual global price.
Well, one of Chainlink’s biggest use cases is to deal with these inadequacies and it has been very successful doing. It is built to be the missing link between smart contracts and real-world use cases to unlock the true potential of blockchain technology. Chainlink uses oracles to link data from reliable analytics to smart contracts- simple!. Now, via Chainlink stable coins, and other asset-backed tokens and coins can mirror the asset they are backing.
Chainlink’s oracles help to infuse data such as feeds from market prices, IoT events, Traditional payments, or even from other blockchains into smart contracts so that when they are used, they carry the actual value they are supposed to. Non-Fungible Tokens (NFTs) can have the value of the actual asset in their meta-data. The application goes on and on. Chain link’s price reference data feed has been used on many occasions such as notification of users when Gas price becomes low so they can make transactions. This is developed by HAL (@HAL_team).
In a recent announcement Chainlink stated:
“@NexoFinance, a leading loan provider with over $600MM in AUM, will use #Chainlink’s Price Reference Data to help calculate interest payments & perform collateralization checks. This provides on-chain transparency & reliability for key lending functions.”
Can Blockchain Technology attract more Adopters?
Real-world use cases are exactly what the world needs now and blockchain-based projects like Chainlink are making things happen. Which blockchain-based project do you think offer real-life solutions that will usher more adopters in?
Credit: Source link