We’re excited to announce that Term Finance—a DeFi protocol enabling fixed-term loans through on-chain auctions—has integrated Chainlink Price Feeds on Ethereum mainnet. By integrating the industry-leading decentralized oracle network, Term now has access to high-quality, tamper-proof price feeds needed to help monitor collateral values for borrowers. This will provide lenders with stronger assurances of borrower solvency and borrowers with the price information needed to better monitor the health of their collateral.
The initial integration will use the following Chainlink Price Feeds: wstETH/ETH, ETH/USD, wBTC/BTC, BTC/USD, USDC/USD, USDT/USD, DAI/USD.
We chose Chainlink as the protocol’s go-to oracle solution because its infrastructure is seamless to integrate and time-tested in production. Chainlink already helps secure leading DeFi protocols responsible for tens of billions of dollars in smart contract value, maintaining robust security and high availability even amidst unexpected events, such as exchange downtime, flash crashes, and data manipulation attacks via flash loans.
Term Finance enables fixed-rate lending for the Web3 community by matching borrowers and lenders through a term auction smart contract. Here’s how it works.
First, borrowers and lenders submit bids or offers. Borrowers submit bids for loans and lenders submit asking rates. The term auction contract then uses an algorithm to select a fixed rate that clears the market. All lenders who asked less than the clearing rate are able to lend, and all borrowers who bid more than the clearing rate are able to borrow at the rate. After borrowers and lenders are matched at a selected fixed rate, Term Finance provides the tools for borrowers and lenders to monitor their collateral and positions. At maturity, borrowers repay the principal and interest to unlock their collateral.
In order to help monitor the price of borrowers’ collateral, the protocol needs access to fresh asset prices that are supplied directly on-chain in a highly reliable manner. Fair market asset prices should reflect a volume-weighted average from all trading environments. Thus, the protocol needed to make use of an oracle network to fetch aggregated price data off-chain and deliver it on-chain to be consumed by our application.
After reviewing various oracle solutions, we integrated Chainlink Price Feeds because they provide a multitude of critical features such as:
“Providing a top-notch lending and borrowing platform for users requires best-in-class price data infrastructure. That’s why we chose Chainlink Price Feeds.”
– Billy Welch, co-Founder of Term Labs.
Term Labs is a blockchain research and development company founded by a team with deep traditional finance, big tech, and decentralized finance experience. Term Labs is dedicated to the development of robust, transparent, and scalable fixed-rate lending on blockchains.
Chainlink is the industry-standard Web3 services platform that has enabled trillions of dollars in transaction volume across DeFi, insurance, gaming, NFTs, and other major industries. As the leading decentralized oracle network, Chainlink enables developers to build feature-rich Web3 applications with seamless access to real-world data and off-chain computation across any blockchain and provides global enterprises with a universal gateway to all blockchains.
Learn more about Chainlink by visiting chain.link or reading the developer documentation at docs.chain.link. To discuss an integration, reach out to an expert.
