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The cryptocurrency lending platform has integrated support for Proof of Reserve reports powered by Chainlink for its version on the Avalanche blockchain. This new development will assist the decentralized application to restore the faith of the investors and keep them updated about the financial state and condition of liquidity pools on the AAVE network.
The onboarding was made possible by BGD Labs. The users can access the PoR panel for AAVE on the Avalanche blockchain to ascertain on-chain activity. Additionally, the users would also be able to take stock of the transparency of the lending markets in DeFi.
BGD Labs has also worked on several other platforms such as DAI, LINK, WBTC, and WETH focusing on wrapped tokens.
Transparency in the DeFi Sector
At present, most cryptocurrency investors are worried about moving their reserves to a self-custody wallet. At the same time, the fear of the instability of DeFi applications has been on the rise. During the current situation, working to improve transparency in the decentralized application sector by BGD is a positive development.
The Avalanche blockchain allows users to lock a given amount of token on another blockchain such as Ethereum and issue the same amount on the mainframe using a process called Wrapping.
The AAVE protocol allows the users to lend or borrow these wrapped tokens after going through the wrapping. Considering the operational method of Avalanche, there is a major need to use transparency tools such as PoR.
During the wrapping process, the investors are exposed to the security threat of not being able to reclaim their tokens. However, the introduction of Chainlink PoR will add another layer of authentication that can be used to accurately verify and record wrapping tokens and avoid any glitches.
At the same time, the PoR extension will verify the total reserves available as collateral at AAVE and mitigate the risk by creating a live on-chain data feed. AAVE CEO, Stani Kulechov said that cross-chain liquidity pool verification in real-time will make AAVE and Avalanche more reliable for investors.
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