• The Chainlink DeFi Yield Index (CDY) aggregates the lending yields across multiple DeFi protocols using the blockchain’s native decentralized oracles network.
  • The chainlink DeFi Index leverages Space and Time’s blockchain indexing as well as database technology to process real-time chain activity.

Oracle services provider Chainlink recently introduced its own Chainlink DeFi Yield Index (CDY Index), designed to aggregate and standardize market-wide DeFi lending rates. The goal behind launching this Index is to provide accurate, robust, and representative data. Furthermore, it also aims to enhance the discoverability of on-chain lending opportunities while improving capital efficiency and liquidity in decentralized finance ecosystems.

The chainlink DeFi Index leverages Space and Time’s blockchain indexing as well as database technology to process real-time chain activity. By offering a unified view of DeFi lending rates, the index enables users to make more informed decisions.

Importance of Chainlink’s DeFi Yield Index

The Chainlink DeFi Yield Index (CDY) aggregates the lending yields across multiple DeFi protocols using the blockchain’s native decentralized oracles network. By improving the visibility of on-chain yield opportunities, the CDY Index aims to boost capital efficiency within the DeFi lending ecosystem. Speaking on the development, Scott Dykstra, Co-Founder of Space and Time, said :

Chainlink has established itself as the standard for verifiable data across DeFi and the emerging onchain finance ecosystem, and Space and Time provides a transformative database solution that unlocks advanced Web3 use cases. We’re excited to provide the indexing and database infrastructure to support the calculations for Chainlink DeFi Yield Indexes and enable financial institutions to capture more opportunities in the public blockchain ecosystem.

CDY Index Utility Across Market Participants

The Chainlink DeFi Yield Index delivers valuable benefits across various market participants:

  1. Capital Market Institutions: The CDY Index enables traditional financial institutions to uncover previously untapped DeFi yield opportunities. It offers insights into DeFi, supporting better yield generation, risk management, investment product creation, and efficient capital deployment.
  2. DeFi Protocols: The index provides a reliable benchmark to boost market transparency, fostering the development of innovative investment solutions. This enhances yield opportunities for both DeFi and stablecoin users.
  3. DeFi Users and Ecosystem: By improving transparency and liquidity, the CDY Index benefits users and lending protocols. Greater liquidity reduces slippage, simplifies loan access, and facilitates more efficient position exits. These improvements can attract more borrowers, increasing protocol revenues and potentially delivering higher yields for liquidity providers.

The Necessity of Having A DeFi Yield Index

DeFi protocols depend heavily on accurate asset pricing data to ensure proper functionality. Chainlink Price Feeds are integral to DeFi lending operations, enabling protocols to value collateral, liquidate loans, calculate interest rates, and optimize risk and capital efficiency.

Moreover, Chainlink’s focus on data quality and secure Oracle infrastructure has established its Price Feeds as the most trusted and widely adopted Oracle solution in DeFi. Building a DeFi yield index requires in-depth knowledge of the lending market and expertise in aggregating data to represent it accurately. With a track record of reliability across diverse markets and environments, Chainlink is uniquely positioned to create such an index.