BGD Labs recently announced integrating the Chainlink Proof of Reserve on Aave Protocol. Based on the Avalanche mainnet, the integration ensures that wrapped tokens on Aave remain collateralized. It is considered a good and useful initiative towards Web3 development and sufficient collateralization of the wrapped tokens on the Aave market on Avalanche.
It also minimizes risks affiliated with the tokens on Aave. With the latest integration, WBTC, WETH, DAI, and AAVE have gained access to the Chainlink Proof of Reserve feeds. As one of the biggest decentralized liquidity protocols, Chainlink oracles have assisted more than 2 trillion dollars in transactions on Aave.
The figure is for 2022 alone, as the oracle protocol has facilitated much higher amounts prior to that. The PoR (Proof of Reserve) uses the biggest decentralized accumulation of node operators to monitor and verify off-chain and on-chain assets.
These assets include wrapped tokens, receiving the service of Sybil-resistant operators. Thus, the integration assists bridged assets to remain collateralized. The co-founder of BGD Labs, Ernesto Boado, also talked about the development.
According to Boado, everyone at BGD Labs is thrilled to be supporting Aave with Chainlink Proof of Reserve. The integration will secure undercollateralized bridged assets across Avalanche. This will reduce the economic and technical risks affiliated with liquidity pools.
On-chain verification is one of the biggest advantages of using Chainlink PoR. In addition, the integration facilitates high-quality data via personalizable external adapters. Users will also gain decentralization at the oracle node and data source level.
At the same time, the integration will propose transparency to assess the PoR at any moment. Even Stani Kulechov, the CEO and founder of Aave, provided supporting statements regarding the development.
According to Kulechov, the integration brings additional visibility into reserve collateral. It is a crucial addition that will establish trust and confidence with end users. Furthermore, some of the major advantages of using the Chainlink PoR are greater on-chain verification, an increase in the overall quality of data, and decentralization at the node level. Additionally, this will enhance the transparency in the ability of any user to monitor the PoR at any point in time.
