Is the Index Price still the most secure approach for DeFi price feeds ?
The Index Price is an aggregate price based on price data from multiple exchanges, DeFi swaps etc. In this case, the Index Price providers put the sources and their own credits on the data to make the users think that the price feeds are reliable.
However, true DeFi users believe that a quote with verification process is much more reliable than the“credited” Index Price. The Ethereum’s permissionless network is formed by different types of DeFi products and protocols, financial data sharing between those participators should be the most secure. Therefore, instead of just putting a third party’s credit on them, the quotes should be open to any verifiers from the network.
As to the mechanism for quote verifications, NEST Protocol bring us an intriguing solution:
The protocol create many quote pools (e.g ETH/Usdt pool, YFI/ETH pool) for users (Quote Miners)to upload their own assets’ quotes with a certain amount of collateral in place, the quotes then will be imputed to systerm’s price chain within a verification period. Prevention of foul play is also in place during the that period where the users’ collateral are open to all forms of arbitrage. Only quotes with no collateral traded will be accepted. At the end, these quotes are packed with verification info when provided to the users.
In many use case scenario of the Defi industry, flash loan attacks and manipulations on oracle need to be limited by the progressive price feed —verified quotes. The permissionless quote pools make these reliable quotes beneficial for the DeFi community and its users.
If you think this idea is cool, and want to discuss more about it
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