Sushi Integrates Chainlink Price Feeds to Secure Kashi Lending and Margin Trading Markets

This post was originally published on SushiSwap

Sushi

Apr 22 · 5 min read

Sushi recently launched Kashi, an innovative lending and margin trading protocol that uses a unique risk isolation architecture in order to support a broad set of previously inaccessible token pairs for lending. In order to ensure that Kashi markets are secured by a robust and proven oracle solution, we are excited to announce that we have integrated the widely used Chainlink Price Feeds on the Ethereum Mainnet and Binance Smart Chain.

Traders can now create custom Kashi markets using any of Chainlink’s large collection of pre-built and collectively funded Price Feeds. Price data provided by Chainlink oracles play a key role in securing Kashi markets by ensuring accurate and up-to-date asset valuations are referenced during loan issuance and the liquidation, thereby establishing protection against undercollateralization. Chainlink’s historical performance in securing billions for the DeFi ecosystem and easy integration is the reason as to why we launched with Chainlink, while other oracle solutions will be integrated into Kashi over the coming months.

A number of markets have been deployed onto the Ethereum mainnet and Binance Smart Chain, providing users the ability to lend, borrow, and collateralize a wide variety of tokens today. Additionally, with Sushi being a multi-chain protocol, we also plan to use Chainlink price feeds across all the various other chains Kashi is deployed to.

Isolated Lending Markets with Kashi

Kashi is a lending and margin trading platform, built upon the BentoBox framework, which allows for anyone to create customized and gas-efficient markets for lending, borrowing, and collateralizing a variety of DeFi tokens, stablecoins, and synthetic assets. Such a broad diversity of tokens is supported through the use of a unique isolated market framework. Unlike traditional DeFi money markets where high-risk assets can introduce risk to the entire protocol, in Kashi, each market is entirely separate in its own (similar to the Sushiswap DEX), meaning the risk of assets within one lending market has no effect over the risk of another lending market. Additionally, this allows for the creation of leveraged short positions within just a single transaction.

Whereas other decentralized lending applications offer users a fixed interest curve, Kashi markets offer an elastic interest rate. The elastic interest rate has a target utilization of 70–80% of the total supply, which increases if the pair is over-utilized and decreases if underutilized. This structure ensures that suppliers are incentivized to maintain their supply of in-demand assets on the platform and, oppositely, the elastic rate keeps assets that receive less interest, off the platform.

Kashi is the first app on BentoBox, a cryptocurrency token vault already optimized to maximize token yield and utility. BentoBox allows tokens in its vault to be used on Dapps built on its infrastructure, such as earning yield from Kashi while simultaneously generating interest from DeFi protocol farms like Onsen. Not only does this increase capital efficiency, but it is highly gas efficient as tokens only need to be deposited once, and then can be immediately used across different supporting applications.

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Positions on Kashi are overcollateralized, meaning there is more collateral deposited than is being borrowed at any given point in time. Ensuring Kashi lending markets stay overcollateralized, even during extreme market volatility, requires the use of reliable price feeds to determine how much a user can borrow against their collateral and when unsafe positions should be liquidated. A Kashi loan position goes into liquidation at 133% collateralization, where the liquidator earns a 12% premium for paying down the debt in exchange for the user’s collateral.

Chainlink oracles provide a volume-weighted average across different centralized and decentralized exchanges, acquiring a global market price. Aggregated data of this type is not natively available on-chain, therefore, Chainlink fetches this data from data aggregators off-chain and delivers it on-chain using a decentralized network of node operators. Because the price data delivered by the oracle is used to keep the protocol solvent, it is extremely important that an oracle mechanism is highly secure and reliable at all times.

About Chainlink

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.

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About Sushi

Sushi.com provides a platform to maximize the value of your cryptocurrencies through decentralized finance tools such as yield farming, token staking and, now, margin trading via Kashi and BentoBox. Sushi is a community-driven decentralized exchange platform, which allows users, like yourself, to vote on ecosystem expansion initiatives and completely share transaction fee revenues with ecosystem participants. Sushi is responsible for making billions of dollars of idle assets earn secure, passive income through its DeFi ecosystem. To learn more, visit sushi.com, join our Discord or follow us on Twitter by searching @sushiswap.

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