You’ve probably heard about cryptocurrencies like Bitcoin, where prices can shoot up and down like a rollercoaster.
That’s exciting for some, but not very useful if you just want to buy something or send money without worrying the rate will crash overnight. That’s where stablecoins come in.
Think of stablecoins as the calmer cousins in the crypto family. They’re designed to keep a steady price, usually by being “pegged” to the value of something stable in the real world, like the US dollar (think USDC or USDT), or other major currencies like the Euro (EURS) and Japanese Yen (GYEN). This makes them super useful for things like online payments, sending money across borders faster and cheaper than old-school banks, and for trading within the world of DeFi (Decentralized Finance).
The Big Problem: Fluctuating Pegs in DeFi
Here’s the tricky part: while a stablecoin like EURS might be backed 1-for-1 by real Euros sitting in a bank, its price on a crypto exchange can sometimes drift away from that perfect €1.00 value. This happens a lot on regular Decentralized Exchanges (DEXs) – think of these like crypto trading platforms run by code instead of a company.
Why do prices diverge?
Old Info: Most DEXs figure out prices based on the trades happening right there on the platform. They don’t automatically know the real-time price of a Euro or Gold out in global markets at a given point in time. They sort of wait for traders to make deals that push the price back to where it should be.
Slow Updates: Imagine the price of the Euro changes quickly because of big news. A regular DEX might lag behind, still offering trades at the old, wrong price until enough people make trades to correct it. This process relies on smart traders called “arbitrageurs” who spot these price differences between exchanges and make quick trades to profit, which slowly fixes the price. But this can takes time.
Markets Close, Crypto Doesn’t: The real-world markets for currencies (Forex or FX) and gold aren’t open 24/7. They close on weekends and holidays. But crypto trades non-stop! So, if something major happens over a weekend that affects the value of the Turkish Lira, a stablecoin like TRYB might still be trading on a DEX at Friday’s price until Monday morning when the real markets open and arbitrageurs can jump in. This leaves the price stale and potentially wrong for days.
For people using stablecoins, this is annoying. You are often given a bad price. For the issuers of stablecoins, it’s a real headache. They want their stablecoin to be useful and reliable, but if its price is constantly oscillating around the peg or has a persistent premium, it undermines that usefulness, even if the backing is solid.
Enter Stabull: Built Different, Built for Stability
This exact problem – especially for stablecoins pegged to currencies other than the US dollar – is why Stabull Finance was created. Stabull isn’t trying to be just another DEX listing every token under the sun. It’s optimized for stablecoins and Real World Assets (RWAs) like a Euro stablecoin or tokenized gold. That’s it. No Dogecoin, no Bitcoin, just the assets that have off-chain equivalents, and real-world value.
Because Stabull is so focused, it can use a smarter approach. It was actually built hand-in-hand with a group of non-USD stablecoin issuers who were tired of their coins’ prices drifting on other platforms. They needed a place where liquidity was good and prices stayed true to their off-chain counterparts.
The Secret Sauce: Off-chain Oracles
So, how does Stabull keep prices more accurate? It uses Oracles.
An oracle brings trustworthy, real-world (off-chain) data on chain, available for defi and other protocols to use. Stabull works with trusted oracle providers (like the well-known Chainlink) that are constantly watching the live prices on the big, global FX and commodity markets.
Here’s how it works on Stabull:
Get the Real Price: The oracle tells Stabull the current, real-world price. For example, it constantly feeds the live EUR/USD price into Stabull’s EURS/USDC trading pool, or the TRY/USD price into the TRYB/USDC pool.
Proactive, Not Reactive: Unlike generalised DEXs that wait for traders to fix prices, Stabull is proactive. It uses the live oracle price as its target. Its smart contract pools (the AMM – Automated Market Maker) are designed to automatically focus the trading activity and liquidity right around that real-time oracle price.
Smart Pricing Curve: Stabull’s pricing curve or “invariant” is designed to offer very low “slippage” (the difference between the price you expect and the price you actually get) when you trade near the current oracle price. It keeps the price strongly anchored to reality.
Dynamic Adjustments: As the oracle feeds in new prices from the real world, Stabull pools automatically adjust their liquidity distribution keeping the price closely aligned with the off-chain market rate. This happens much faster than waiting for arbitrage traders.
Why This Matters for You (and Everyone Else)
Stabull’s oracle system has big benefits:
Better Prices on Stabull: When you swap stablecoins on Stabull, you’re much more likely to get a price that reflects the true, current market value, even during weekends or volatile times.
Stable Pegs for Issuers: Companies issuing stablecoins like NZDS or BRZ can rely on Stabull as a place where their token’s value stays tightly pegged, boosting user trust and making their coin more useful.
Helping Stabilize Other DEXs Too: This is pretty cool – Stabull helps keep prices stable even on other exchanges. How? Remember those arbitrage traders? When the price of, say, EURS drifts on Uniswap but stays correct on Stabull (thanks to the oracle), traders (or their bots) will instantly spot the difference. They’ll buy EURS cheap on Uniswap and sell it for the correct price on Stabull (or vice versa), making a small profit. This act of trading forces the price on Uniswap back towards the correct peg. So, Stabull acts like a price anchor for the whole DeFi ecosystem for these assets, just by providing a reliable, oracle-based price. This activity also generates fees for people providing liquidity on Stabull!
Staying Safe: Handling Oracle Risks
Oracles are essential for bringing real-world prices on-chain, but they’re not without risks. History has shown that oracle manipulation can cause major damage—like the Mango Markets exploit in 2022, where attackers manipulated a thinly traded token to drain protocol funds. These types of exploits typically target low-liquidity crypto assets, where market prices can be spoofed at relatively low cost.
Oracles that track FX and commodity markets, however, are inherently more resilient to this class of attack. That’s because the FX and commodity markets each settle multiple trillions of dollars in volume per day. These are deep, globally traded markets making them extremely difficult to manipulate. It would be practically impossible to move the global price of USD/JPY or gold to attack a single on-chain protocol.
Stabull sources oracle rates from trusted providers like Chainlink, which operate decentralized oracle networks composed of independent node operators, making it hard for a bad actor to influence pricing. Beyond this, Stabull is actively improving its oracle implementation by:
Introducing secondary oracle feeds to cross-check pricing data.
Automatically reducing reliance on oracles during TradFi off-hours or when prices deviate abnormally, temporarily allowing market-driven pricing to play a larger role.
Wrapping Up: The Future Needs Stable Prices
Stablecoins are incredibly important for making crypto and DeFi practical for everyday use. But they’re only truly useful if they actually stay stable!
Stabull Finance tackles the price stability problem head-on, especially for the growing world of non-USD stablecoins and tokenized assets like gold. By using reliable, real-time oracles like Chainlink to constantly anchor its prices to reality, Stabull offers:
Accurate trading for users.
Reliable pegs for stablecoin issuers.
Increased stability across the entire DeFi space.
It’s not just another exchange; it’s a specialized piece of essential infrastructure, built with input from the people who needed it most, helping to make the future of decentralized finance more stable, reliable, and truly global.
Source: https://bravenewcoin.com/insights/keeping-it-steady-how-stabull-uses-oracles-to-help-stablecoins-stay-pegged