Top Crypto News: Aave DAO votes to integrate Chainlink PoR
Aave DAO has voted to integrate Chainlink PoR into the Aave Protocol. This will allow Aave users to securely and efficiently access data from off-chain sources. Chainlink is a decentralized Oracle network that provides tamper-proof data to smart contracts.
The fear, uncertainty and doubt in the overall crypto market has been at an all-time-high, especially after the collapse of the FTX crypto exchange and the subsequent crash in prices of various cryptos in the beginning of November 2022. So to address that FUD and reassure its own users and customers – Aave’s decentralized autonomous organisation (DAO) has voted in favour of implementing a proof-of-reserve (PoR) for its own decentralized lending service.
Decentralized lending protocol Aave is all set to implement the proof-of-reserve system to protect its bridged assets on Avalanche. This is being done to shore up its customer confidence and also possibly attract new customers who were probably on the fence about it till now.
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The Aave community has voted to integrate #Chainlink Proof of Reserve.
Congratulations to @bgdlabs and @AaveAave on the successful proposal. This integration will help mitigate risks around wrapped tokens. https://t.co/MvIid5oWHa
— Chainlink (@chainlink) December 22, 2022
Thus, with that objective in mine, Aave’s DAO – one of the most popular decentralized finance (DeFi) ones running on Ethereum, has approved blockchain Oracle Chainlink’s Proof-of-Reserve smart contract by a vote of over 99% in favour of the proposition. The decision is expected to cover specifically Aave v(2) and v3 on the Avalanche blockchain network.
As mentioned earlier, this is being done on the assets bridged on the Avalanche network. So bridged assets is essentially a decentralized way of moving value between blockchains that aren’t usually able to communicate with each other. The asset gets locked within a smart contract on its native home chain and then a close is issued on the target network. Aave v3 on Avalanche has bridged version of various crypto assets like DAI, USDT and USDC among many others.
While bridging enables a multitude of functionalities and seamless interoperability amongst different blockchains – this setup creates a fertile ground for hackers as security vulnerabilities are prone to happen if not taken care of on these token bridges. Some of the most prominent examples of compromised bridges include Axie Infinity‘s Ronin network hard that resulted in a loss of over $600 million being exploited and cross-chain Nomad faced exploits worth over $191 million earlier this year
Thus, it becomes extremely important to keep these cross-chain bridges secure from the prying eyes of hackers and also to enable further trust amongst users and the public at large, enabling a proof-of-reserve check on the same also becomes hugely beneficial.
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The Aave community has approved the release of Aave <> Chainlink (@chainlink) Proof of Reserve, to be activated initially on Aave Avalanche (@avalancheavax)
Coming January 2023, be prepared 👻 pic.twitter.com/95TDvw2Yh1— bgdlabs (@bgdlabs) December 22, 2022
Bored Ghost Developing, or bgdlabs – the Web3 studio who proposed the idea of the proof-of-reserve for Aave’s Avalanche implementation mentioned in its report that it will help in mitigating the attacks on bridged assets on the network. Going forward, this could also potentially be picked up by other cross-chain asset bridges and eventually bring down a large number of hacking attempts on these vulnerable points.
“The focus is more on automatically detecting and acting whenever any symptom of security issues on a bridge appears,” said Ernesto Boado, ex-CTO at Aave and co-founder at Bored Ghost Developing, which wrote the proposal. “We think that obviously, transparency goes first, in this case, our development goes a step further.”
According to crypto news publication, CoinDesk – Max Melchet – the market lead of PoR at Chainlink Labs told CoinDesk that proof of reserves allow decentralized technologies to accurately report reserve values rather than trusting other single parties to do so.
“Leveraging Chainlink Proof of Reserve, Aave can verify that bridged assets accepted on the platform are fully collateralized before allowing users to borrow against them,” said Melcher.
Source: CoinDesk.
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