CryptoPunks as collateral? How Chainlink and JPEG’d are doing just that

Chainlink price feeds can be used to energy DeFi companies on JPEG’d, a lending protocol that permits NFT holders a chance to acquire credit score on their belongings whereas nonetheless retaining possession of them.

Chainlink oracle networks present sensible contracts with a option to reliably hook up with any exterior API and leverage safe off-chain computations for enabling feature-rich functions. The protocol presently secures tens of billions of {dollars} throughout DeFi, insurance coverage, gaming, and different main industries.

Turning to Chainlink

As per a launch shared with CryptoSlate, JPEG’d is merging the time-tested Collateral Debt Place (CDP) mannequin with NFT collateral to allow a brand new DeFi primitive referred to as Non-Fungible Debt Positions (NFDPs). Although JPEG’d, customers will be capable to mint a decentralized stablecoin referred to as PUSd that’s absolutely collateralized by their NFTs. 

Like all lending and borrowing platforms, upholding the solvency of the platform requires a safe decentralized oracle resolution to precisely value the NFTs used as collateral. Because of their distinctive non-fungibility, the character of NFT liquidity (or usually lack thereof) is totally different from fungible ERC20 tokens.

To bridge the 2 ecosystems, JPEG’d is working with Chainlink to launch a customized decentralized oracle resolution for pricing NFT belongings, beginning with CryptoPunks.

This Chainlink Value Feed shall be foundational to the JPEG’d platform, which serves as a brand new DeFi primitive that enables customers to leverage their present NFTs as collateral to acquire loans, all in a trust-minimized and permissionless method. 

The way it works?

For the preliminary integration, the Chainlink Value Feed will quantify the Time-Weighted Common Value (TWAP) of each gross sales and ground costs to create a blended value that shall be used to worth ground punks. This oracle excludes wash-sales, outliers, and shall be periodically written on-chain by Chainlink’s community of decentralized Node Operators. 

Utilizing a TWAP helps mitigate outlier occasions by taking the typical of a number of gross sales over a predefined time period, making manipulation considerably tougher and costly to tug off. 

Moreover, by solely monitoring the typical value of the lowest-priced ground CryptoPunks (in different phrases every thing however apes, aliens, and zombies), the protocol can assist forestall the difficulty of customers borrowing extra in funds than their NFT is definitely price. 

This helps to resolve the difficulty of variable pricing for various NFTs in a set through the use of the least widespread denominator. Extra particulars to be supplied at launch.

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