Chainlink (LINK) oracles have found their way to xDai, an Ethereum sidechain that is increasingly gaining acceptance among DApp developers who cannot afford to stay on the Ethereum mainnet.
As announced by Chainlink on Thursday, its price feeds are live on the xDai mainnet and provide price data for an initial range of trading pairs including LINK / USD, AAVE / USD, DOT / USD and SUSHI / USD. More pairs can be added quickly if the need arises, the company said.
The integration was completed by Protofire, a development workshop and xDai validator. The team received a Chainlink Community Grant to port native Chainlink oracles to xDai, including a token-bridge adapter that enables native LINK payments for the oracle’s functionality.
The Chainlink Price Feed integration is the latest in a series of positive adoption messages for the xDai project. The chain already hosted major Ethereum-based DApps such as Perpetual Protocol, a derivatives platform, and Omen, a prediction market developed by Gnosis. The inclusion of native Chainlink oracles removes a major obstacle to projects that rely on them and potentially opens xDai to more DApps looking to escape the congested Ethereum mainnet.
Decentralization is good, but it doesn’t pay off for gas
xDai is a relatively centralized sidechain that is secured by an independent group of validators. Sidechains are a type of chain in which a standalone blockchain uses someone else’s token as its native currency to pay transaction fees. In xDai’s case, this token is Dai from MakerDAO. The architecture combines the economic efficiency of the two environments, but the sidechain is otherwise a completely independent unit with its own security rules.
In the Ethereum community, xDai is commonly known as a centralized layer 2 solution. It was launched by PoA Network, a project whose name directly suggests centralization. Proof of Authority is the somewhat euphemistic name of a consensus model where the validators are chosen by the insiders of the project rather than a community.
The xDai chain has switched to a proof-of-stake model since its inception, which is very similar to that of EOS or Binance Smart Chain. The total number of validators can never exceed 19 compared to the tens of thousands of validators on Ethereum’s beacon chain. The advantage of this architecture is the faster scalability. XDai offers 70 announced transactions per second for simple token transfers.
In a conversation with Cointelegraph, Friederike Ernst, Chief Operating Officer at Gnosis, agreed that xDai is somewhat centralized:
“It’s not as decentralized as the mainnet, that goes without saying. Obviously, these are for very different use cases: You don’t want to do things on xDai where you need the economic consensus guarantees of the first layer. But you don’t actually need them for many things. “
The appeal of xDai comes in part from its almost plug-and-play compatibility with Ethereum. The OmniBridge allows tokens to be moved to xDai and back, while the blockchain architecture is almost identical to that of Ethereum. This makes porting DApps or infrastructure elements such as oracles very easy.
Concerns about centralization don’t seem enough to stop adoption. Chainlink sees itself in line with the demands of the developers. Johann Eid, Head of Integrations at Chainlink Labs, explains to Cointelegraph that “smart contract developers should be able to work with the chain that best suits their use case.”
For Omen, the decision to start a business on xDai was an immediate necessity, Ernst explained:
“In most cases, the gas costs outweigh the disadvantages of a PoA chain. The fact is, while people are betting on a lot of Layer 2 solutions, very few of them are in production
The increasing acceptance of xDai or Binance Smart Chain apparently contradicts the preference of the crypto community for decentralization. Ethereum fans often believe that DeFi’s proliferation on the blockchain is the result of its more decentralized architecture and community spirit. Indeed, the surge in the use of blockchains like Tron or BSC occurred after it became clear that Ethereum couldn’t handle its load.
At the same time, decentralization alone does not seem to be sufficient. For example, the most Ethereum-like blockchain out there is Ethereum Classic, which was founded by a community that believed Ethereum wasn’t decentralized enough. It has generated almost no interest from DApp developers.
More centralized solutions have a big advantage for them – they work now. Layer 2 rollup-based solutions are still in development, with optimistic rollups being the closest to being released. However, Ernst wasn’t particularly enthusiastic about the week-long wait. “I’m a big fan of zkRollups. There are no withdrawal restrictions there, but the technology is not well developed. “
While some developers continue to wait for roll-up-based solutions, platforms like xDai can move forward unimpeded. “Ultimately, it is a compromise between the higher security guarantees from Ethereum and the savings in ease of use, innovation, speed and costs with L2 sidechains,” a xDai spokesman told Cointelegraph. As long as gas fees for Ethereum remain high, DApps may be forced to prefer practicality to ideology.
