Rapid Insights: Chainlink’s Hybrid Oracle Solution for DeFi Derivatives

Chainlink is regarded as the leading oracle provider in DeFi, currently securing over $10B for leading protocols like Aave and Compound. Generally speaking, the largest TVL sources for value secured are lending protocols, which are amenable to high-latency price data with a relatively low degree of granularity.

Compared to lending protocols, there currently isn’t much value in derivatives protocols being secured by oracles. One potential reason is that these protocols typically use an oracle to price contracts (options, futures, etc). Oracle frontrunning has historically been one of the primary weaknesses for derivatives applications.