With the increasing number of projects building on the Arbitrum Rollup Testnet — a fully-featured Optimistic Rollup layer 2 network that enables highly scalable and low cost smart contracts — we have shifted our focus to expanding support for key developer tooling and infrastructure required to build advanced smart contract applications on Arbitrum. In doing so, Ethereum developers will not only be able deploy their smart contracts directly onto Arbitrum without requiring any custom tooling or contract rewrites, but they will have all of their familiar infrastructure available as well.
One of the most important pieces of infrastructure necessary to achieving this goal is a secure connection to off-chain resources. Accordingly, we are excited to announce that Chainlink’s industry-leading oracle network is now live on the Arbitrum Testnet! The initial integration involves the launch of a Chainlink-powered ETH/USD, LINK/USD, SNX/USD, AAVE/USD, and BTC/USD Price Reference Data Feeds, which developers can integrate into their layer 2 smart contracts for external market data. Chainlink’s integrations as the first oracle solution live on Arbitrum empowers developers to begin building and testing a wide range of scalable DeFi applications on Arbitrum that rely on the price of Ether, such as lending protocols, decentralized exchanges, derivatives platforms, synthetic assets, prediction markets and more, and the Offchain Labs team recommends Chainlink for any app that requires access to real world data.
In fact, many leading DeFi applications are already planning to use Chainlink on Arbitrum, such as Bancor and MCDEX. Bancor,which aims to build a scalable version of its Automated Market Maker (AMM) using Chainlink Price Feeds to mitigate impermanent loss. With contract deployment on the Arbitrum Rollup Testnet being entirely permissionless, any developer or project can now begin testing their Chainlink-connected smart contracts in a high throughput layer 2 environment. “Chainlink Price Feeds serve as a core building block of AMM implementations on Arbitrum testnet and could be used to unlock novel pool functionality once mainnet goes live,” said Yudi Levi, CTO of Bancor.
“The price feeds from Chainlink and low gas cost enabled by Arbitrum are both prerequisites for the MCDEX V3 AMM to reach its top-tier capital efficiency.” — Jean, co-founder of MCDEX
How Arbitrum Enables Scalable, Low Cost Solidity Smart Contracts
With the rising adoption of Ethereum, there has been a sharp increase in transaction costs, which has led to an untenable Layer 1 user experience and many users and use cases are currently priced out of the market. To overcome this scalability problem while still retaining the high level of security provided by the Ethereum blockchain, we created Arbitrum Rollup as a layer 2 solution that can scale any smart contract application in a fully trustless manner. Among rollups, Arbitrum is unique in that it has the lowest transaction costs and the highest compatibility. Arbitrum works with existing developer tooling and languages and enables porting smart contracts without changing the smart contract code or downloading new software.
Like Layer 1 solutions, Arbitrum Rollup is unable to connect to external data sources on its own, and requires a secure and reliable oracle solution to bridge on-chain and off-chain environments. With many smart contract applications requiring oracles, seamless integrations with oracle solutions are fundamental to the success of the Arbitrum ecosystem and its support for a next wave of advanced dApps and trust minimized protocols.
Integrating Arbitrum Contracts With Chainlink’s Time-Tested Price Feeds
When thinking about the oracle solution best suited to be the first to integrate with Arbitrum, we are excited to be working together so closely with Chainlink to provide the most secure, reliable, fully-functional, and widely adopted oracle network in the market and we recommend it for all Arbitrum developers. Chainlink is already proven and time-tested in-production, currently securing over $10 billion dollars in on-chain value for leading and emerging DeFi applications. The Chainlink Network is also highly flexible and generalizable, meaning it can provide a wide range of oracle solutions and off-chain resources, and it is founded and developed based on cutting-edge academic research from industry leaders and renowned academics, which uniquely matches our own focus on academic research when developing Arbitrum.
While our initial testnet launch, which is now live today, is for Chainlink’s popular ETH/USD as well as LINK/USD, SNX/USD, AAVE/USD, and BTC/USD Price Feeds, Chainlink has an extensive and ever-growing collection of additional Price Feeds for cryptocurrencies, FX rates, commodities, and indices that can be brought to Arbitrum Rollup in order to support the many projects and developers wanting to build high-throughput DeFi applications. These Chainlink Price Feeds are built upon decentralized oracle infrastructure that consists of numerous security reviewed node operators and premium data sources, leading to highly accurate, available, and tamper-resistant data feeds that are inherently resistant to vulnerabilities like flash loan-induced price manipulation attacks. Importantly, through Arbitrum’s high throughput and low fees, Chainlink Price Feeds will be able to update at a higher frequency to ensure applications receive market data closer to real-time. This scalability improvement can enable the development of more advanced DeFi applications such as higher leverage markets that are more sensitive to small price deviations.
Beyond Price Feeds, we envision a wide range of Chainlink oracle solutions coming to Arbitrum in the future, such as the Chainlink Verifiable Random Function (VRF) to supply high-performance blockchain gaming and NFT applications with verifiable randomness, Chainlink Proof of Reserve (PoR) to validate the collateralization of tokenized assets via frequent attestations of their off-chain reserves, and a general purpose oracle solution for getting any type of off-chain data, opening up markets like IoT-driven insurance products, AI-driven financial services, and consumer-friendly web applications.
We are confident that Chainlink will enable a vast array of data-driven and scalable smart contracts applications on Arbitrum that were previously infeasible due to the limitations of baselayer blockchains. We are excited to see how developers on Arbitrum will integrate oracle solutions now that they have access to pre-built Chainlink Price Reference Feeds.
“With the goal of providing Arbitrum developers with the best and familiar infrastructure and tooling, Chainlink was the clear choice for the first oracle supported on Arbitrum due to its strong technical team, proven track record of securing high-value contracts, and flexible architecture that supports customized oracle designs and connection to any off-chain resource,” stated Ed Felten, Co-founder of Offchain Labs. “Having access to high-quality market data and secure oracle solutions will make it even more seamless for DeFi applications to deploy their contracts onto Arbitrum and provide their users with a superior experience due to the lower costs and significant increase in throughput.”
“We’re excited to provide the most expansive set of oracle solutions to the Arbitrum layer-2 Rollup ecosystem, starting first with Price Feeds that enable developers to build highly scalable and cost-efficient DeFi applications using premium financial market data. By deploying oracle networks directly on Arbitrum, Chainlink can provide DeFi applications with more frequent price updates while still maintaining its robust security, leading to the creation of more secure and feature rich smart contracts.” — Sergey Nazarov, Co-Founder of Chainlink
Chainlink is the most widely used and secure way to power universal smart contracts. With Chainlink, developers can connect any blockchain with high-quality data sources from other blockchains as well as real-world data. Managed by a global, decentralized community of hundreds of thousands of people, Chainlink is introducing a fairer model for contracts. Its network currently secures billions of dollars in value for smart contracts across the decentralized finance (DeFi), insurance and gaming ecosystems, among others.
Chainlink is trusted by hundreds of organizations to deliver definitive truth via secure, reliable data feeds. To learn more, visit chain.link, subscribe to the Chainlink newsletter, and follow @chainlink on Twitter.
About Offchain Labs
Offchain Labs is a New York based company that is building Arbitrum, a scaling solution for Ethereum that drastically reduces costs and latency. A so-called “Optimistic Rollup”, Arbitrum instantly scales apps, reducing costs and increasing capacity, without sacrificing Ethereum’s security. Porting contracts to Arbitrum requires no code changes or downloads as Arbitrum is fully compatible with all existing Ethereum developer tooling. Arbitrum is currently the only smart-contract rollup with a public testnet, and the team is already working with dozens of launch partners ahead of its upcoming release on Ethereum mainnet. Some of those projects can be found on their testnet portal.