Understanding the Concept of Chainlink Data Streams
Chainlink Data Streams offers low-latency delivery of off-chain market data that can be verified on-chain. With the availability of Chainlink Data Streams decentralized applications (dApps) can access high-frequency market data, supported by a fault-tolerant, decentralized and transparent infrastructure.
Developed completely on a new pull-based oracle design, the Chainlink Data Stream is quite different from conventional push-based oracles which provide updates on-chain-based oracles for particular periods or price brackets. This design ensures trust minimization through on-chain verification.
Understanding the Difference: The ChainlinkData Stream works on a pull-based approach, making it easier for applications to access and use data reports as and when needed. On the contrary, Chainlink's push-based Oracles provide regular updates on the chain. Verifying data on the chain ensures that the data was agreed upon and signed by the Decentralized Oracle Network (DON).
The use of push-based oracles is beneficial for applications, which require verification of on-chain data regularly. At the same time, the use of pull-based oracles is required by applications which require high-frequency updates with lower latency. The use of pull-based oracles not only helps to maintain cryptographic data integrity but also provides data with more accuracy by checking and verifying as and when required by users.
Detailed Market Insights: The main task of Chainlink Data Streams is to provide required metrics like mid-prices and liquidity-weighted bid and Ask (LWBA) prices for crypto markets. The LWBA prices can be adjusted according to the existing order books and provide in-depth information about market liquidity. LWBA prices improve accuracy in transactions, enhanced risk management and enhanced transactional efficiency.
Flexible Infrastructure: The Data Streams API services are developed with the help of an active-active multi-side deployment setup. The use of this setup ensures the smooth operation of services, even if any service fails.
Use Cases:
- Perpetual Futures: The availability of low latency data and front-running protection allows for on-chain perpetual futures protocols to compete with centralized exchanges while maintaining decentralized transparency.
- Options Trading: Pull-based oracles ensure timely and accurate settlement of options contracts. The liquidity data provided by Chainlink Data Streams also supports dynamic risk management logic.
- Prediction Markets: Higher frequency data updates empower users to respond quickly to real-time events while ensuring accurate settlement data.
Data Streams Implementations
- Streams Trade (Using Chainlink Automation): The combination of Chainlink automation and Chainlink data streams allows for automated execution of transactions, mitigating front running, and reduction of biased or adverse incentives in non-user-triggered orders.
- Streams Direct (Custom Integration)
- REST API or WebSocket: Fetch reports or subscribe to updates.
- Smart Contracts: Verify data reports on-chain.
