Hi,

What's Spotlight? Every week, we highlight the most interesting events happening around Cardano. We want to help you cut the noise and find the signal.

Price down? But innovation is still up. This week, we discuss two positive catalysts of the week - the EMURGO x Huawei partnership and the AXO <> Cerberus partnership. Finally, we discuss the Liqwid <> Charli3 oracle issue.

EMURGO x Huawei

EMURGO, a founding entity of Cardano, announced a strategic partnership with Huawei. Huawei is a leading global provider of information and communications technology (ICT) infrastructure and smart devices, serving billions of users in the East.

They are also the leading cloud infrastructure provider in the Asia-Pacific region. The partnership is focused on bringing Huawei’s cloud infrastructure into the Cardano ecosystem.

EMURGO will establish a Cardano Validator Node on Huawei Cloud. This simplifies running validator nodes for SPOs based in the Asia-Pacific region. The geographical decentralization of nodes helps create a more robust network. Many blockchains have nodes primarily based in the US/EU, making them susceptible to regulatory attacks. This move will strengthen the decentralization of the network!

Additionally, Cardano will be able to access Huawei’s Marketplace, a platform used by many leading enterprises, expanding the reach of its Web3 capabilities. This will enable developers to spin up infrastructure services with a few clicks! This will save developers time and money on Cardano.

“This partnership will serve as a springboard for our Web3 services and will go a long way to future-proof Huawei Cloud’s business in the long run” - Rex Lei Yang, Managing Director of Huawei Cloud Singapore.

Read more: EMURGO x Huawei

Axo <> Xerberus Index

Crypto is becoming institutionalized, and we need to build solutions for trading. Mutual and index funds are among the most common investment vehicles, with companies like BlackRock and Vanguard managing trillions of dollars of customer money.

Index funds populated by Vanguard have more than $5T in assets and are growing rapidly. Index funds create a basket of assets and allow you to accumulate them passively. An example could be the S&P 500 index, which lets you buy the top 500 stocks on the S&P.

Crypto Indexes haven’t gained as much popularity due to their high volatility. However, as we move towards institutionalization, structured products will gain more popularity with time. Indexes will be more attractive to passive investors who aren’t as well-versed in crypto.

Axo <> Xerberus has partnered to create buy baskets and Indexes. Xerberus is a risk rating protocol that has worked on measuring and modeling crypto assets through data. Their goal is to create Basket Buys, Trading Signals, and index incorporation with Axo.

Axo’s programmable swaps and domain-specific language make it easy to create trading strategies. Cerberus can use onchain and offchain metrics to analyze risk and sentiment and create trading strategies utilizing them. Users would be able to select the thesis they prefer from these strategies!

Watch for more details: Xerberus interview.

Liqwid Oracle Incident

This week we had a major incident with Cardano’s top lending/borrowing protocol - Liqwid. The issue was regarding to a faulty oracle pricing.

Pooled lending products like Aave or Liqwid need to determine the price of the collateral and the price of the borrowed asset. They require this to liquidate the collateral once the ratio falls below a set level. Any issues here could result in bad debt and even the protocol's insolvency.

We need Oracles that take the price from various sources like CEXs or DEXs, verify them, and provide it to the protocol. For Liqwid, this task was done by Oracle provider - Charli3.

On 7th April, Oracle reported the price of Djed at $0.005 instead of $1, which was a very high deviation and a misreported figure. This could have caused major liquidations and bad debt for the protocol. However, they had safety guards set with a lower bound at $0.9, which saved them from total liquidation of all Djed assets.

Charli3, in their incident report, pointed it out as an error in Blockfrost API. They claimed to have taken data from various DEXs through their APIs for verification. However, projects like WingRiders and Sundae reported that those APIs should not be used for in-production usecases.

Unfortunately, the Oracles on Cardano are still unreliable. Hopefully, this type of core infrastructure will be fixed!

Read more: Incident Report.

Best content of the week

Watch: Suite Spot Podcast: Smart Places.

Read: Cardano GPT: Fastest Grow AI X Cardano project

Meme of the week

Alright, Cardano got hands!

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