Curve governance has voted in favor of a proposal by Michael Egorov, the founder, and CEO of Curve Finance, to remove the ±1.5% safe limit for the Chainlink price in the oracle crvUSD. The proposal aims to improve the stability and accuracy of Oracle data, which is vital for DeFi protocols.
The Need for Oracle Data Optimization
Oracle data bridges real-world market prices and DeFi protocols, which rely on accurate and timely information to function properly.
However, oracle data can be subject to volatility and manipulation, which can pose risks for users and platforms.
Egorov’s proposal addresses a key concern regarding the use of Chainlink’s data source in the oracle crvUSD system, which is a weighted average of USD-pegged stablecoins.
The proposal argues that while using spot prices directly from the market may seem reasonable during periods of high volatility, it can also lead to undesired losses.
Therefore, the proposal suggests a balance between using Chainlink’s data source and maintaining stability during turbulent market conditions.
The Adjustment of Chainlink Price Limit
The approved proposal’s main feature is removing the existing ±1.5% safe limit for the Chainlink price within the oracle crvUSD system.
This limit was meant to prevent sudden price changes that could affect the oracle crvUSD value.
However, under the new adjustment, the Chainlink data source will be used directly if the Chainlink price deviates significantly from the internal oracle EMA (Exponential Moving Average) by more than the specified limit.
This mechanism aims to provide a safeguard against extreme price fluctuations that could otherwise result in unnecessary financial losses for users.
The Significance of Decentralized Governance
The successful passage of this proposal demonstrates the power of decentralized governance in the DeFi space.
The decision-making process carried out through on-chain voting, reflects the involvement and dedication of community members and stakeholders to improve the resilience of DeFi protocols.
Curve Finance is one of the leading platforms for stablecoin trading and liquidity provision on Ethereum. It leverages its own governance token, CRV, to enable users to propose and vote on various aspects of the platform.
Chainlink is a decentralized Oracle network that provides reliable and secure data feeds for smart contracts across various blockchains. It has partnered with numerous DeFi platforms, including Curve Finance, to enhance their functionality and security.
