Aave, the leading decentralized finance (DeFi) lending and borrowing protocol, has integrated new oracles from Chaos Labs to automate its risk management system. This is the first time in the protocol’s history that DAO has approved the use of a second Oracle network beyond Chainlink.
Aave is the biggest lending protocol with $18.44 billion in total value locked (TVL), according to DefiLIama. Generally, Oracles feed external data and information to smart contracts, including the prices of assets.
Edge Risk Oracle To Enhance Aave’s Robustness
According to the source, the oracles, known as Edge Risk Oracles, will enable real-time changes for the lending protocol’s risk parameters such as liquidation thresholds as well as supply and borrowing capacities.
“It’s a huge deal because Aave is deployed on 10+ networks. There are, on average, 10 markets in every network so it’s like 100 different money markets. And every money market has, let’s say, over 30 different parameters”, Chaos Labs CEO Omer Goldberg said. “We’re talking about … thousands of parameters that need to be managed in real-time, in line with very volatile, fast-moving markets.”
With Edge Risk Oracle, Aave can now optimize liquidity, enhance protocol stability, and provide a more secure user experience. Users no longer need to engage in governance forums for every minor change, as the automation process largely reduces the time required for updates. It will narrow down the average time from 96 hours to under a minute.
The new integration will also make the protocol more robust against market volatility as well as ensure smoother operations in times of uncertainty.
