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Most cryptocurrency experts and pioneers have claimed that the cryptocurrency market is currently in a nascent stage. It will go through all the motions, a rite of passage, to become an independent and established entity. The ongoing FTX debacle is one such example of deconstruction and reconstruction.
Chainlink or LINK, a cryptocurrency protocol, has recently presented the Proof of Reserve concept to address the void left by FTX exit.
The main reason that FTX has created such cracks in the cryptocurrency community is on account of transparency issues related to the DeFi space that are not much different from the conventional financial networks.
Benefits of Proof of Reserves
Chainlink Labs have proposed a new idea called Proof of Reserve or PoR. This is a process where data projections from exchanges, stablecoins, traditional financial enterprises, and others reveal the details about reserve allocations for the benefit of the users.
This process involves the deployment of smart contracts that track all the changes in the company reserves and relay this information to the required channels.
Chainlink developers have commented that the cryptocurrency sector has big choices to make and is ready to integrate changes that set it apart from the traditional black-box nature of the TradeFi. Chainlink has been around since 2020, but it has currently gained more traction following the collapse of the FTX exchange.
It is important to note that the FTX controversy keeps becoming worse with every growing second. The company has said to have collaborated with SEC Chief to establish a monopoly over the cryptocurrency sector.
On the other hand, some reports suggest that FTX has been slipping a major chunk of its capital into Alameda Research.
Chainlink Labs’ statement suggests that cryptocurrency enterprises should aspire to ingrain better utility in comparison to the traditional financial sector. The firm also interjected that the moguls of the crypto sector should work on creating a transparent and global economy rather than using speculative tactics like traditional finance.
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