One of the largest platforms for Bitcoin liquid staking token issuance, Lorenzo Protocol is all set to integrate Chainlink for better services in the future.
According to the official announcement by the platform, through the implementation of industry-standard Chainlink services, such as Proof of Reserve, Price Feeds, and CCIP, Lorenzo will improve the usefulness of its Bitcoin liquidity finance layer.
The platform also added that “We’re also integrating Chainlink CCIP because it is the industry-standard interoperability solution, with various novel features”
What is Bitcoin Liquidity Finance Layer?
A decentralized financial system that offers access to Bitcoin liquidity for DeFi and other purposes is known as a Bitcoin liquidity finance layer.
The ease with which Bitcoin can be purchased or sold without influencing its price is known as its liquidity. A market that is liquid is thought to be less volatile and more stable. Because it lowers investment risk, it more difficult to manipulate prices, aids in the development of an exit strategy, provides price stability and lower volatility, and aids in the analysis of trader activity, liquidity is crucial.
The bid-ask spread, or the difference between the highest and lowest bid prices, is used to measure the liquidity of cryptocurrencies.
Taking about the partnership, Matt Ye, Founder & CEO of Lorenzo Protocol said “We are excited to be adopting the industry-standard Chainlink Platform to significantly enhance the utility of our Bitcoin liquidity finance layer. By leveraging Chainlink, Lorenzo can rapidly scale and innovate within the BTCFi ecosystem to accelerate its adoption”
Lorenzo’s Partnership With Chianlink Comes As The Platform Aims At “Best Security”
Lorenzo in its announcement said that the platform had looked at a number of data solutions before deciding on Chainlink Price Feeds since it has the best security and dependability of any oracle network available.
Lorenzo at present allows users to stake Bitcoin liquidity into proof of stake chains by putting Babylon’s Bitcoin shared security concept into practice.
This allows users to earn rewards while also enhancing the security of these networks. The platform provides liquidity for DeFi projects by tokenizing staked Bitcoin into liquid principal tokens and yielding accruing tokens.
In order to cryptographically confirm that Lorenzo’s assets are fully backed 1:1, they have integrated Chainlink Proof of Reserve as part of this adoption. Any on-chain asset backed by off-chain or cross-chain reserves can have its true collateralization determined by smart contracts using the information provided by Proof of Reserve.