Aave Taps Proof of Reserves System for Avalanche Market
DeFi Lender Seeks to Protect Wrapped Tokens Vulnerable to Bridge Exploits
By: Tarang Khaitan •Byte
Aave will use Chainlink’s Proof of Reserves system to make sure wrapped tokens on the lender’s Avalanche market is sufficiently collateralized, the DeFi players said Tuesday.
The integration will be carried out by Bored Ghosts Developing Labs (BGD Labs), a trio of prominent Aave community members who banded together to develop the Aave ecosystem in March 2022.
The Proof of Reserves (PoR) system will monitor and manage risks in wrapped versions of AAVE, DAI, and other tokens.
Numerous assets are bridged from Ethereum to Avalanche, which can then be used on Aave. Yet bridges are vulnerable to hacking and exploits — of the $3.1B stolen from DeFi protocols in 2022, two-thirds of the proceeds were taken from cross-chain bridges, according to Chainalysis.
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Four days later, it released a tool that would let users migrate their Aave v2 positions to Aave v3. The tool was made accessible across the Ethereum, Polygon, and Avalanche networks.
In an exclusive interview with The Defiant, Aave founder Stani Kuchelov stated that GHO would be launched mere weeks after Aave v3 deployment goes live on the Ethereum network. Kuchelov, however, did not give a specific launch date.
These recent developments did not go unnoticed by the community, as the leading lending protocol, with $4.4 billion in TVL, saw an upswing in its token’s price action.
Aave’s governance token, AAVE, has jumped 28% in the last 30 days compared toa 16% rise in ETH, according to The Defiant Terminal.