ICHI Leveraging Chainlink on Mainnet to Empower Community Created Stablecoins
- Stable-ish, instead of being minted and redeemed for exactly $1.
- Maximalistic, instead of driving scarcity of other cryptocurrencies.
- Complex, instead of simple minting and redeeming processes.
- Custodial, instead of self-hosted, community governed infrastructure.
ICHI may not have even launched like 70% of 200+ VC funded stablecoin projects. However, in only 3 months, ICHI’s integration with Chainlink has made it possible for four different cryptocurrency communities to create and govern their own in-house stablecoins. These newly possible stablecoins are oneBTC, oneETH, oneLINK, and oneWING. Chainlink’s decentralized oracles are used to price each of these assets against USD, as well as provide a USDC/USD feed. These oracles are referenced during the minting and redeeming processes, ensuring they are carried out according to fair market prices and remain fully collateralized.
How ICHI Leverages Chainlink
A core tenet of ICHI is that every cryptocurrency community deserves their own stable currency. Those stablecoins should be in part collateralized by the community’s native and scarce cryptocurrency in combination with an existing stablecoin like USDC to reduce market risk. Suppose a hypothetical cryptocurrency named ABC coin wants to create their own stablecoin. They could use a oneToken that is minted using 100% USDC as collateral, but this would not drive any value to the ABC cryptocurrency community.
Instead, a community’s oneToken could use a hybrid collateralization consisting of a collateral mixture of their ABC cryptocurrency and USDC. Over time, users would be able to pay less USDC to mint oneTokens as its minting ratio goes beneath 100% and ABC cryptocurrency gradually increases in percentage of the oneToken’s total collateral. This increases token utility for the ABC cryptocurrency community while still maintaining strong stability.
However, it also introduces risk that must be controlled with accurate price feeds. For example, you need an accurate Bitcoin price feed to mint oneBTC (the stablecoin for Bitcoin), which has less USDC and more Bitcoin over time. (see Image 1)
Why We Chose Chainlink
We selected Chainlink’s Price Feed oracles because they are the most secure and widely used solution in the DeFi industry, already securing 10+ billion dollars in on-chain value for leading projects like Synthetix, Aave, and Nexus Mutual. Chainlink’s Price Feeds provide a multitude of assurances to users, including:
- Use high-quality and decentralized data feeds sourced from a multitude of premium data aggregators, ensuring price feeds that represent a global, volume-adjusted market price aggregated from across hundreds of exchanges. This makes Chainlink Price Feeds inherently resistant to data manipulation or inaccuracies of a single or small set of exchanges (e.g., such as those induced by flash loans).
- Supported by secure oracle nodes operated by leading blockchain DevOps, security teams, and data providers, protecting us against Sybil-attacks and downtime.
- Built upon decentralized infrastructure at both the node operator and data source levels, resulting in highly available, manipulation resistant, and accurate price data and oracle services.
- Incorporate shared financial costs amongst many DeFi projects for commonly used Price Feeds, reducing the cost for each additional user and generating long-term self-sustainability.
The first project that ICHI referred to Chainlink is wing.finance, a cross-chain DeFi platform built by the Ontology team. They will be able to lower the minimum minting ratio for their oneWING stablecoin from 98% to 90% after their upcoming integration of Chainlink Oracles.
ICHI will work with many more projects over the coming months to launch oneTokens, and each time ICHI will recommend that the project uses Chainlink oracles to properly price their stablecoin.
“Chainlink’s decentralized oracles will enable crypto communities to use ICHI to lower the percentage of USDC required to mint their stablecoin, all without hurting scalability, experience, and/or adoption,” said ICHI Co-Founder Masanobu Fukuoka. “As a result, the oneTokens that are able to rely on Chainlink’s decentralized oracles have lower minting ratios and larger treasuries.”
You can start by visiting ICHI’s website or reading ICHI docs. Next, take a look at the oneToken treasuries. They all have 250% treasury reserves, making them the most backed stablecoins in the market. Next, you can mint your own oneTokens and deposit them to ICHI liquidity farms to earn 100+% APY in ICHI governance tokens.
You must use a community’s cryptocurrency to mint their oneToken. For example, you must use wBTC (wrapped Bitcoin) to mint oneBTC (Bitcoin’s oneToken). oneTokens are useful when buying or selling goods and services, paying expenses and taxes, and creating USD exposure in DeFi (decentralized finance) applications. oneTokens are not backed by complex algorithms or lending markets with liquidation risks like other decentralized stablecoins. And they are minted and redeemed for exactly $1 of value just like USDC and USDT.
Chainlink is the most widely used and secure way to power universally connected smart contracts. With Chainlink, developers can connect any blockchain with high-quality data sources from other blockchains as well as real-world data. Managed by a global, decentralized community of hundreds of thousands of people, Chainlink is introducing a fairer model for contracts. Its network currently secures billions of dollars in value for smart contracts across the decentralized finance (DeFi), insurance and gaming ecosystems, among others.
Chainlink is trusted by hundreds of organizations to deliver definitive truth via secure, reliable data feeds. To learn more, visit chain.link, subscribe to the Chainlink newsletter, and follow @chainlink on Twitter.