Ren Adopts Chainlink’s Onchain Proof Of Reserve Mechanism to Further Secure DeFi

The high market demand for wrapped assets in the DeFi world means that the nodes of RenVM now secure about $900M bridged and $270M in cross-chain assets. In a bid to ensure that these wrapped tokens are protected while assets fully collateralize them on their native chain, Ren announced today that is adopting Chainlink’s Proof of Reserve mechanism.

According to Ren, this Proof of Reserve would enable smart contracts on the Ethereum blockchain to autonomously verify cross-assets’ latest collateralization whenever possible. These cross-assets include renBTC, renBCH, and renZEC on the Ren ecosystem.

The proof of Reserve mechanism also improves the transparency of the cross-chain assets connected to the DeFi ecosystem and their ability to be audited. 

This statement means that with the Proof of Reserve mechanism, dApps and users of Ren can now audit Ren assets’ collateralization in a fully automated and censorship-resistant manner, without having to read a monthly audit report, otherwise known as manual off-chain verification.

The features of Chainlink’s Proof of Reserve mechanism doesn’t come automatically. Something is done first. 

Firstly, Chainlink updates the Proof of Reserve Reference Contracts with current collateralization. This update is made possible after addresses on the Bitcoin, Bitcoin Cash, and Zcash blockchains are monitored, ensuring that only fresh data with significant deviation in the number of reserves are forwarded on-chain.

The regular update feature by Chainlink oracles protects money market protocols that use Ren assets as collateral, in the sense that they can view their true collateralization before any borrowing or lending can occur.

Concerning the new development, Loong Wang, CTO, and Co-founder of Ren said,

We’re thrilled to make Chainlink’s Proof of Reserve feature available to the Ren ecosystem, providing users with additional security features that further enhance the reliability of Ren assets as key sources of collateral and payment in the DeFi ecosystem.

He continued, “Chainlink’s ability to automate the on-chain auditing process in a highly reliable and transparent manner, allows users to further trust Ren assets without having to track the reserves on their own manually.”

At the time of writing, Chainlink (LINK), which reached a new all-time high this year, was trading at $9.61 with a $3.3 billion market cap.