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Chainlink has launched the Chainlink DeFi Yield Index (CDY Index), a new data product designed to aggregate market-wide DeFi lending rates.
By leveraging the blockchain indexer and database technology from Space and Time, Chainlink aims to provide accurate, robust, and representative lending data.Â
This innovation is expected to enhance discoverability for investors, improve capital efficiency, and create a more transparent DeFi lending ecosystem.
Addressing the Data Gap in DeFi Lending
Chainlink noted, that DeFi has become one of the most significant use cases for smart contracts, with approximately $47 billion in total value locked across hundreds of lending protocols as of January 2025.
As the sector grows, it has attracted interest from traditional financial institutions looking for on-chain investment opportunities. However, accessing reliable data on DeFi yields remains a challenge.
One of the biggest challenges DeFi lending protocols face is the accurate valuation of assets, collateral, and interest rates. Chainlink has already established itself as a leader in on-chain data with its Price Feeds, which help lending protocols like Aave and Compound determine debt values, manage risk, and ensure capital efficiency.
The introduction of the CDY Index builds on this foundation by offering an aggregated DeFi lending yield benchmark, filling a gap in the industry.
The Problem with DeFi
Unlike traditional finance, which has established indices such as the federal funds rate, DeFi lacks a universal base rate. The rapid evolution of DeFi protocols, combined with the diverse nature of yield-generating strategies, makes it difficult to aggregate DeFi yields into a single reference point.
Chainlink, with its decentralized oracle networks and expertise in secure data aggregation, is well-positioned to provide a reliable index that represents the broader DeFi lending market.
A Transparent and Secure Index for DeFi Lending
The Chainlink DeFi Yield Index is built to promote transparency and fairness within DeFi lending markets. Chainlink serves as the Index Administrator, ensuring security and reliability, while Space and Time acts as the Calculation Agent, using its blockchain indexing and database capabilities to process real-time data.
By structuring the index in this way, Chainlink ensures that the CDY Index remains accurate, unbiased, and resistant to manipulation.
This new index will help capital markets institutions explore previously untapped yield opportunities in DeFi. By providing a reliable window into DeFi lending rates, traditional financial players can evaluate new ways to earn returns, manage risks, and develop innovative investment products.
DeFi protocols will also benefit from increased market transparency, allowing them to create new financial solutions that improve liquidity and attract more users.
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Benefits of the DeFi Ecosystem
The introduction of the CDY Index is expected to bring several benefits to the broader DeFi ecosystem. Market participants, including institutional investors, DeFi protocols, and everyday users, will gain access to a standardized yield benchmark that enhances transparency and liquidity.
This increased visibility could lead to deeper liquidity pools, reducing price slippage and making borrowing and lending more efficient.
For traditional financial institutions, the CDY Index provides an essential tool to evaluate on-chain yield opportunities, helping bridge the gap between DeFi and traditional capital markets.
As more institutions enter the space, this could lead to increased liquidity and stability within DeFi lending protocols, making them more attractive to investors.
A Step Forward for DeFi and Institutional Adoption
With the launch of the Chainlink DeFi Yield Index, DeFi lending is taking a major step toward mainstream adoption. By providing a standardized yield benchmark, Chainlink is making it easier for institutions to explore DeFi lending, leading to increased capital inflows and market maturity.
This move aligns with Chainlink’s broader mission of connecting traditional finance with decentralized ecosystems through secure, verifiable data solutions.