Dec 23, 2022 Frank Stewskid
Aave will integrate Chainlink's Proof-of-Reserve, further increasing the platform’s security
Aave, a cryptocurrency lending and borrowing platform, has announced that it is integrating Chainlink's Proof-of-Reserve (PoR) feature into its platform, after 99% approval in a governance vote. This integration aims to increase security and reliability for Aave users and the cryptocurrency market as a whole.
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The integration of Chainlink's PoR will initially be applied to Aave v2 and v3 on the Avalanche network. Every Aave v2 and v3 pool on Avalanche will each have its own associated Proof-of-Reserve Executor smart contract, which will allow for the execution of emergency protective actions on the pool if necessary. These actions include the disabling of borrowing for all pool assets and the freezing of assets with PoR failures on Aave v2 and the suspension of all operations on Aave v3.
The integration of the feature aims to add protection against two main attack vectors that can exploit "bridged" assets on the Aave platform: the extraction of deposited tokens on the originating network and infinite minting on the usage network. A Proof-of-Reserve Aggregator smart contract will act as a registry of assets and proof of reserve feed addresses and will implement and expose an "areAllReservesBacked" function. This function will validate that the proof of reserve feed value is equal to or greater than the total supply of the asset for a list of inputted asset addresses. If any asset does not meet this requirement, the function will return a false value and a list of assets that do not meet the reserve requirements.
Overall, the integration of Chainlink's PoR feature into Aave's platform will provide an additional layer of security and reliability for users and the cryptocurrency market. The Aave team will continue to work on further developments and improvements to the integration in the future.