Oracle Price Feeding
Bend protocol uses NFT floor price from OpenSea, X2Y2 and LooksRare as data of price feeding for NFT collateral. Bend protocol only supports the bluechip NFT asset's floor price for price feeding on-chain. Bluechip NFT's floor price is not easily manipulated. Besides that bend protocol calculate TWAP of floor price to filter the price fluctuation from OpenSea, X2Y2 and LooksRare marketplaces.
Bend oracle design and running mechanism:
- 1.The off-chain node obtains the raw floor price of NFTs from OpenSea, X2Y2 and LooksRare trading markets;
- 2.Filter the raw floor price data, such as the floor price difference between OpenSea and X2Y2 is too big;
- 3.Calculate the floor price according to the transaction volume of OpenSea, X2Y2 and LooksRare;
- 4.Compare the difference between the price on the chain and the latest floor price to determine whether the floor price needs to be uploaded to the chain;
- 5.Call the contract interface to upload the floor price to the on-chain contract and calculate the time-weighted average price (TWAP) on-chain to weight the floor price, ensuring the price is reasonable;
- 6.The TWAP algorithm is open source on the on-chain contract, and everyone can verify the validity of the data;
For security and reliability, we will run multiple nodes to ensure that valid price data can be uploaded to the on-chain oracle contract in a timely manner at all times and the on-chain contract limits the frequency of price feed and the difference between two price feeds cannot exceed a threshold.
The frequency of the oracle update will automatically be adjusted based on market volatility. A higher volatility means a higher update frequency. For security reasons, the technical details are not disclosed.
BendDAO team works closely with Chainlink. We will integrate Chainlink NFT oracle when it goes live. Before that, we run the Oracle by ourselves.
As shown in the figure, the floor price of the oracle for CryptoPunks is consistent with the average deal price and TWAP price.
As shown in the figure, the floor price of the oracle for BAYC is consistent with the average deal price and TWAP price.