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Chainlink Labs launched its Proof of Reserve product on November 10th as a solution to future trust problems in the crypto exchange market. In the Chainlink Labs tweet thread Asked Will cryptocurrencies continue to repeat the mistakes of the traditional black-box financial industry? Or will better systems emerge?
#Crypt We are at a crossroads.
Will cryptocurrencies continue to repeat the mistakes of the traditional black-box financial industry, or will a better system emerge?
Better systems are possible and Proof of Reserve is one way #chain link We provide the transparency that users demand.
Chainlink (@chainlink) November 10, 2022
In answer to this question, the company offered a Proof of Reserve (PoR) product. This includes centralized exchange asset reserves, off-chain bank account balances, cross-chain collateral, real-world asset reserves, and much more.
Over the past few days, the cryptocurrency market has plummeted thanks to the liquidity crisis at FTX, the second largest cryptocurrency exchange in the world. Exchanges have failed to process withdrawals in a timely manner, and panic caused by these delays is spreading across the cryptocurrency market.
In the wake of these ongoing problems, the crypto community has started debating how to solve the problem.One solution is to require all exchanges used by customers to provide proof of booking. is.
Proof of Reserve is a technology that allows users to audit the reserves of cryptocurrency exchanges in real time. Several exchanges have already implemented proof of reserves, Binance CZ claims All exchanges now offer this feature.
However, some exchanges state: takes more than a few weeks Create a Proof of Reserves system.
In response, Chainlink Labs claimed that its product provides an out of the box solution that exchanges can implement immediately.
Here, Chainlink PoR verifies off-chain assets and relays on-chain reserves. pic.twitter.com/ExmEZWiTLA
Chainlink (@chainlink) November 10, 2022
The product uses a Chainlink node connected to both the exchange’s API and its vault address, and the node is connected to a Proof of Reserve smart contract. Contracts can be queried by other accounts on the network to determine if an exchange’s crypto assets equal its liabilities. Chainlink Labs sees this as a simple solution to the trust problem on exchanges.
However, not everyone is convinced. A Twitter user of hers named BLanka said that Binance chose not to use Chainlink PoR.
