Enhancing NFT Oracles with Chainlink’s CCIP
When it comes to NFT lending, NFT oracles play a critical role in the lending process by providing accurate prices, risk mitigation, and cost-efficiency.
ParaX, previously known as ParaSpace, has partnered with Chainlink to use their oracles due to their effective risk management and mitigation systems powered by a unique algorithm. This has resulted in ParaX having the lowest number of liquidations compared to other NFT lending platforms.
While Chainlink’s oracle algorithm is effective at mitigating risk, it lacks price accuracy, which is crucial for NFT lending. Inaccurate price data can lead to unhealthy accounts and lower borrowing amounts.
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New NFT Oracle Solution
ParaX has developed a new open-source NFT oracle solution that is more accurate and gas-efficient while maintaining best-in-class risk management systems. By using Chainlink’s CCIP, ParaX can create interoperable NFT oracles that provide greater price accuracy and reduce gas consumption by over 50%.
How It Works
The new oracles transmit NFT price data between a layer two such as Arbitrum and Ethereum mainnet. This process involves using three clients on Arbitrum to feed price data to ParaX’s ‘NFTFloorOracleProvider.’ The finalized price is then transferred cross-chain to the NFTFloorOracle contract on Ethereum mainnet.
Benefits of the New Oracles
The use of CCIP allows ParaX to provide accurate, efficient, and gas-optimized NFT oracles that not only benefit its users but also other NFTfi protocols due to their open-sourced architecture.
Hot Take: Innovating with Chainlink’s CCIP
This groundbreaking innovation by ParaX demonstrates how partnerships with leading blockchain solutions like Chainlink’s CCIP can revolutionize the efficiency and accuracy of NFT oracles. By addressing key challenges in the industry, ParaX sets a new standard for NFT lending platforms and opens up opportunities for broader adoption across the ecosystem.
