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Use of Oracles

Why we don't perform onchain price checks

Overview

"Oracles" typically refer to price feeds a protocol utilizes to perform key business logic and functions. Ethena Labs utilizes price feeds from various sources given the importance of real-time data to our trading & risk workflows which exist offchain.
Our system is split between onchain and offchain components. We do not use any onchain oracles at the moment as all pricing is external to onchain price fees with centralized perpetual markets, but we do use extensive offchain data sources from multiple providers.

Price Feeds & Ethena's Offchain Systems

Ethena Labs relies on price feeds in order to price the mint and redeem USDe requests per the available derivatives market liquidity as well as manage the risk of our derivatives positions. Real-time data feeds indicate not only where we delegate collateral, but the various risk profiles between the exchanges.
With this in mind, it's critically important that Ethena has access to & is constantly consuming real-time price feeds, especially from where it matters most; the exchanges where we hold derivatives positions due to their margin requirements.
Ethena consumes real-time pricing information from two primary sources:
  1. 1.
    CeFi Exchanges such as Binance, Bybit, Okx, Deribit, Bitmex and Bitget.
  2. 2.
    Pyth.
  3. 3.
    Redstone
This real-time data is used extensively throughout the system to apply business logic, but to also ensure the integrity of all actions.
Something interesting is how we rely heavily upon CeFi Exchange price feeds, given the volume-weighted importance of their traded instruments, but we also rely upon Pyth and Redstone to validate internal pricing throughout the system and before every single mint and redeem USDe request is accepted by Ethena. This ensures we thoroughly check for any inconsistency and protect the protocol from manipulation that might be occurring from one/multiple sources.
We are constantly working to provide the resilience and integrity of our price sources and evaluating other low latency offchain pricing services.
Last modified 3d ago