Reportedly, Chainlink Labs made the offering of its Proof of Reserve (POR) product as a solution for future trusting issues in the cryptocurrency exchange market on November 10, 2022, as reported by Cointelegraph.
According to Cointelegraph, through a Twitter thread, Chainlink labs asked “Will crypto continue to repeat the mistakes of the traditional black-box financial industry? Or will a better system emerge?” In regard to the question, the platform made the offering of its POR product, which the platform mentioned to be useful for “for verifying centralised exchange asset reserves, off-chain bank account balances, cross-chain collateral, real-world asset reserves, and much more.”
On the basis of information by Cointelegraph, over the past couple of days, the cryptocurrency market has reportedly been in a freefall on account of a liquidity crisis at cryptocurrency exchange, FTX. It is believed that the exchange’s inability to process withdrawals on a timely basis, and the panic from these delays has happened throughout the cryptocurrency market. Due to the ongoing concerns, the cryptocurrency base has held discussions for solving the problem, and a solution that has been given is for customers to ensure that every exchange they used offer a POR. It is believed that some exchanges have highlighted on the possibility of taking weeks or longer for creation of a PORs system, to which Chainlink argued about its product giving the possibility of quick implementation for exchanges.
Moreover, Cointelegraph noted that the product utilises Chainlink nodes connected to both the exchange’s API and its vault addresses, and the nodes being connected to a POR smart contract. Chainlink believes in this being a solution to the problem of trust in exchanges.
(With insights from Cointelegraph)