The Chainlink Stellar integration is now live on the Stellar Mainnet, with Chainlink Data Feeds and Data Streams available on the platform. With this integration, users will have access to market data that can be used to build DeFi apps such as lending, stablecoins, tokenized stocks, and real-world assets (RWAs).
Stellar Development Foundation will take care of the operating costs of this oracle service using the Chainlink Scale initiative. This integration will allow developers to get access to the needed infrastructure without covering all the costs on their own.
This integration can contribute to the increased use of the tokenized asset market available within the Stellar network, whose value is about $3.54 billion.
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What Does the Chainlink Stellar Integration Bring to the Network?
The Chainlink Stellar Integration solves a critical problem faced by blockchain-based applications: connecting to sources of reliable off-chain information.
In order to perform any financial transactions, smart contracts require precise market pricing. If there is no access to reliable off-chain data, applications will be unable to evaluate the collateral, handle loans, and conduct any other market-related transactions.
Chainlink Data Feeds provide price information for smart contracts, whereas Data Streams provide low-latency data for applications requiring timely updates.
Using this integration with Stellar, one can develop DeFi applications including lending platforms and tokenized asset-based applications. Using price information from feeds, protocols can determine the value of collateral and liquidate it when necessary.
Depending on the adoption of Chainlink and Stellar by developers, the Chainlink Stellar integration can be used for derivative and equity tokens.
Stellar’s $3.54 Billion Tokenized Asset Market
Stellar includes tokenized government debt, money market instruments, and other types of financial instruments through initiatives like Ondo Finance, Franklin Templeton, and Spiko. USDC, which belongs to Circle, also provides payment and settlement services on the network.
But these instruments require credible price information, adequate liquidity, and safe smart contracts in order for them to work with DeFi applications.
Chainlink’s Stellar Integration helps developers use market information from outside sources, possibly allowing lending protocols to consider tokenized instruments as collateral.
Stellar Foundation Covers Chainlink Oracle Costs
The most notable aspect of this announcement is the decision made by the Stellar Development Foundation to subsidize the operating expenses of Chainlink services via the Chainlink Scale program.
Oracle services may bring extra expenses to the blockchain developers, especially when an application requires a constant supply of information about the state of the market. Providing support for these expenses may help make Chainlink services more accessible to other projects.
This measure will stimulate developers to create financial applications using Stellar rather than limit them to only issuance and transfers of assets.
In addition, the Chainlink Stellar Integration underscores the need for linking the tokenized financial assets with the infrastructure required to perform operations such as lending and trading.
Nevertheless, low infrastructure cost will not be sufficient to ensure adoption. The future implications will depend on whether the developers adopt the services and whether their applications gain enough traction.
Stellar DeFi Growth Adds to the Opportunity
Chainlink Stellar Integration follows the increase in the Total Value Locked by Stellar DeFi projects that amounted to almost $273 million as of October 2, based on the October report.
Now with Data Feeds and Data Streams ready, developers can link the tokenized assets to the apps requiring market data. This might help in developing new DeFi products, but their use will be dependent on liquidity and security considerations.
What Comes Next for the Chainlink Stellar Integration?
The introduction of Chainlink Data Feeds and Data Streams provides developers with additional infrastructure to build data-driven financial applications on top of Stellar.
Also, by paying the cost of running the oracles, the Stellar Development Foundation is offering financial support, which might simplify adoption for other projects within the ecosystem.
In case developers leverage the Chainlink Stellar Integration to offer more lending platforms, collateralized applications, and other DeFi applications, tokenized assets already available on the Stellar platform will find more use cases.
It remains to be seen what comes next after the adoption of new applications and the liquidity that they might attract. For now, it allows Stellar developers to have access to additional market data infrastructure.
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