Synthetix has announced their partnership with Chainlink, leading to the launch of their Synthetic oil asset, sOIL.
Synthetix utilizes a Chainlink decentralized oracle network to mirror the price movement of oil. The creation of sOIL gives DeFi users on-chain exposure to oil, which happens to be one of the most important commodities in the world as the world’s economy relies upon oil.
.@synthetix_io has launched sOIL on mainnet—a synthetic asset that mirrors the price movement of oil using a #Chainlink decentralized oracle network. Any #DeFi user can now get on-chain exposure to one of the world's most important commodities, oil. https://t.co/zryVlmI9Ba
— Chainlink – Official Channel (@chainlink) November 12, 2020
This new token has two available versions: sOIL and iOIL. sOIL will ensure that users capture a long position while iOIL will ensure that users capture a short position. Just like other Inverse Synthetic assets, iOIL will possess an entry price, a lower limit, and an upper limit. The upper and lower limits serve to cap profit and loss – whenever they are reached, it will cause the token’s value to be frozen. The token’s value will remain frozen until it is re-deployed.
A Better Future for DeFi
Launching sOIL is a representation of a better future for decentralized finance. This is because Synthetix will enable a large space of the traditional market to become accessible to cryptocurrency holders. By partnering with Chainlink, Synthetix will also be able to continuously provide new assets due to having access to quality data providers.
Eventually, crypto traders will be able to access an ever-increasing range of traditional market assets just by using their own cryptocurrency wallet.
Utilizing Chainlink for sOIL Prices
A great deal of work was needed to ensure that sOIL went live on Synthetix. One reason is that oil price discovery usually takes place in futures markets. Such markets consist of individual contracts that have different expiry dates. As Synths require a single reference price, the existence of varying contracts is a problem.
By utilizing a decentralized oracle network powered by Chainlink, sOIL is able to develop a Crude Oil Index that has no expiration period. This Crude Oil Index will be based on ICE Brent Crude Oil futures prices.
Through securing off-chain connections to advanced data providers like XBTO, the Chainlink-powered oracle will allow for the aggregation of raw oil data. This oil data will be taken from multiple contracts in the futures market and will be delivered on-chain in a manner that is very available and resistant to manipulation. This is possible with the use of a decentralized network of Sybil-resistant oracle nodes.
Additionally, sOIL and iOIL are available for purchase on Kwenta and Synthetix. Users who want to trade on the future price of the asset can now set up binary options markets with sOIL.
As at the time of writing, Chainlink price was $13.62 with a 24-hour trading volume of $1,661,005,066. LINK price has gone up 6.7% over the last 24 hours. It also has a circulating supply of 392 million coins and a max supply of 1 billion coins. At the present time, Binance is the most active market trading LINK.
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