Hi Deven,
Thanks for the question. Let’s break it down:
Traditionally, Uniswap market liquidity is a metric for Compound listings, but it’s not a sole requirement for Chainlink as Price Feeds pull from several sources.
That is correct because it launched hard-pegged to a dollar like other stablecoin markets on Compound v2. It introduces risk when collateral is enabled, which is why we recommend using a primary Price Feed like Compound III and can add Proof of Reserve as an additional safety feature. Otherwise, the legacy route uses the UAV that would require an underlying liquid market on Uniswap V2/V3.