Case Study: Avalanche x Chainlink x BENQI
Interview with Benqi Co-founder Dan Mgbor
- Name and role at BENQI?
Dan Mgbor — Co-founder
- What sets BENQI apart as a platform?
BENQI liquid staking on Avalanche abstracts away the challenges of maintaining staking infrastructure by allowing users to match with performant validators on the Avalanche network. The protocol’s maturity also sets us apart, as BENQI’s lending market was launched in 2021 and liquid staking in 2022. Having since undergone periods of high volatility while consistently growing our user base, we are a time-proven, battle-tested platform.
- What is the unique advantage of building on Avalanche? Why did you choose to build on Avalanche?
Avalanche is a hyper-performant blockchain, with its C-chain boasting high throughput and fast finality. More importantly, the usage of subnets enables us to overcome the blockchain scaling trilemma. It’s also exciting to note that BENQI will play a part in validating the subnets that are currently launched and those that will be launched.
- What are the team members’ backgrounds?
The core contributors are members spread out geographically, from diverse professional backgrounds across engineering, finance, and operations. However, we all have one common goal that binds us together, which is to build protocols that improve the Avalanche network. This is evident through the timely launch of our liquid staking product and the use of the best-in-class oracle infrastructure, Chainlink.
- Why did you choose to build with Chainlink? What do Chainlink Data Feeds uniquely unlock / why is it essential to choose the most secure and reliable oracle possible for pricing data
In a lending market such as BENQI’s, the reliability of an oracle is of utmost importance. Chainlink is the most reliable and secure in the industry, providing BENQI with accurate and timely price data for various assets, enabling users to execute functions such as lending, borrowing, and liquidations safely.
- How has Chainlink Automation helped BENQI extend the value of Chainlink Proof of Reserve to protect its users from outlier circumstances?
BENQI utilizes Chainlink Proof of Reserve (PoR) to monitor reserves on the Avalanche Bridge, where assets are bridged from the Ethereum mainnet. While the bridge is secured by SGX and the bridge nodes, PoR acts as a final safeguard in the unlikely event of an outlier circumstance, such as a mismatch of assets backing the bridged assets on Avalanche.
Chainlink Automation, a performant and ultra-reliable smart contract automation service, helps freeze the supplying and borrowing functions of BENQI in case of outlier circumstances, such as if an anomaly is detected in the reserves backing a wrapped asset through a Proof of Reserve feed. In these cases, Chainlink Automation immediately pauses and disables affected BENQI pools to help mitigate arbitrage opportunities and other potential risks from a cross-chain exploit.
- How does Chainlink help you to outsource development/technical overhead and focus on your core product?
Chainlink provides excellent technical documentation and seamless integration via existing infrastructures. Our tech team had no problems integrating Chainlink services, and the Chainlink Labs’ teams replied swiftly when our team reached out.
- What is the value that Chainlink Proof of Reserve provides in terms of increasing transparency and thus user confidence when using bridged assets?
Unfortunately, there have been various occasions in the Web3 ecosystem where the value of bridged assets exceeded the value of the assets backing them, leading to significant bad debts being accrued to the protocol, sometimes resulting in the demise of the said protocol.
By using Chainlink Proof of Reserve to pause BENQI transactions immediately if any such mismatch between bridget assets and their reserves were detected, the solvency of the protocol is protected and users have high confidence that any funds on the BENQI platform are safe.
- What specific key results have already been achieved since integrating Chainlink?
Without Chainlink, BENQI’s lending markets would probably not have been launched, as we would not feel comfortable without a performant, secure, and decentralized oracle. Chainlink has ultimately helped put users more at ease, and that has translated to higher DAUs and TVL.
- What was your experience working with Chainlink Labs and Ava Labs?
Chainlink Labs and Ava Labs are some of the best teams in the space, with people who care and take pride in their work.
- What are your long-term objectives for BENQI? How does it fit into the future of Web3?
The core team’s main goal is to build products that help the Avalanche network. We foresee playing a big part in the future of subnets, securing, validating, and maybe even launching a subnet that encompasses all of our products one day.
About BENQI:
BENQI is a suite of decentralized finance protocols built on Avalanche, consisting of the BENQI Markets, BENQI Liquid Staking and Ignite.
