Aave will present the ‘Proof of Reserve’ approach for secure bridging assets at Avalanche!
99 Percent of DAO Supported the Proposal
Following the collapse of FTX, many centralized and decentralized exchanges in the crypto sector are trying to provide trust to users with a Proof of Reserve approach. In addition to these developments, the idea of a new approach also came from Aave. The company will offer Proof of Reserve for bridging assets in Avalanche.
More than ninety-nine percent of DeFi Protocol DAO members voted in support of the blockchain oracle Chainlink’s Proof of Reserve smart contract. In this regard, Aave v2 and v3, which are on the Avalanche blockchain, will be the first focus.
The Growing Abuse of Token-Bridges
By using ‘bridged assets’ within DeFi, capital can be transferred between blockchains that would not normally interact with each other. After the asset is secured by a smart contract on the chain from which the asset is sent, a copy of it is published on the sent network. DAI, USDT and USDC are tokens with versions that bridge over Aave v3 on Avalanche.
Security Bugs
However, there are several vulnerabilities that malicious users have repeatedly attacked through token bridges. As a result of attacks on the token bridges of the Ronin network used by the Web3 game Axie Infinity and the cross-chain protocol Nomad, a total of more than $ 800 million loss happened.
The creators of the proposal, the Web3 studio Bored Ghost Development, claim that thanks to PoR smart contracts, it will both strengthen Aave’s Avalanche implementation and at the same time, protect against attacks on the bridging assets of the network.
About Aave
Aave is a decentralized, non-custodial liquidity market protocol in which users can participate as suppliers or borrowers. While suppliers provide liquidity to the market to generate a passive income, borrowers can borrow in a perpetually or one-block liquidity mode.
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