Oracle

In the dynamic realm of decentralized finance, Chromatic Protocol stands out by harnessing the immense potential of perpetual futures. While originally designed for price discovery of illiquid assets, perpetual futures now find their niche in the cryptocurrency market, primarily serving as instruments for hedging and speculation. In light of this, we entrust the crucial price discovery function to Chainlink, an esteemed external oracle, allowing us to focus on enhancing the capabilities of hedging and speculation within our protocol.

By delegating the price discovery function to Chainlink, Chromatic Protocol eliminates the possibility of price impact between the underlying asset and the futures price. This, often referred to as ‘zero price impact’, offers advantages but limits the protocol's ability to perform price discovery. To overcome this limitation, we have introduced a ‘dynamic fee mechanism’ that indirectly adds price discovery functionality, addressing this drawback.

Chromatic Protocol ensures seamless synchronization between asset price updates on our protocol and the oracle rounds provided by Chainlink. The frequency of price updates for Chainlink is meticulously calibrated. In the Arbitrum network, the Chainlink price updates occur at a frequency aligning with a 0.05% price deviation in ETH or every 86400 seconds. Through this precision, our protocol guarantees accurate and timely asset price information, empowering users to make informed decisions within the Chromatic ecosystem. For more detailed information about Chainlink's price updates in the Arbitrum network: Chainlink Data Feeds.