- Over 99% of participants voted in support of the proposal.
- The proposed solution is Aave using the aggregator smart contract in ChainLink PoR.
As the decentralized finance (DeFi) spin on the centralized exchanges is scrambling to shore up client trust in the aftermath of FTX, Aave will introduce a “proof of reserve” approach to secure bridging assets on Avalanche.
Over ninety-nine percent of participants in the decentralized autonomous organization (DAO) that manages Aave, the widely used DeFi protocol on Ethereum voted in support of blockchain oracle Chainlink’s Proof of Reserve smart contract. Aave v2 and v3 on the Avalanche blockchain will be the primary focus.
Rising Exploits of Token-bridges
By using “bridged assets,” DeFi may transfer capital across blockchains that wouldn’t typically be able to communicate with one another. After the asset is secured in a smart contract on the issuing chain, a copy is issued on the receiving network. DAI, USDT, and USDC are just some of the tokens that have bridging versions on Aave v3 on Avalanche.
However, there are several security holes in this system, which hackers have attacked time and time again through token bridges. This year, hacks on the token bridges of the Ronin network used by the Web3 game Axie Infinity and the cross-chain protocol Nomad resulted in exploits totaling over $800 million.
The proposal’s creators, Web3 studio Bored Ghost Developing, claim that their PoR smart contracts not only strengthen Aave’s Avalanche implementation but also protect against assaults on the network’s bridging assets.
The proposed solution is Aave using the aggregator smart contract in ChainLink PoR to secure tokens on both the source network (Ethereum) and the resulting bridging network (Avalanche). According to Chainlink Labs’ proof of reserve go-to-market head Max Melcher, proof of reserves remove the need to rely on a central authority for reliable reserve reporting.
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