Chainlink Proof of Reserve (PoR) uses the blockchain industry-standard decentralized oracle network, which has facilitated over $7.7 trillion in transaction value, to verify that on-chain assets are fully collateralized by cross-chain or off-chain “real-world” assets.
In the wake of last fall’s FTX collapse, Chainlink co-founder Sergey Nazarov has indicated a growing number of DeFi protocols and traditional financial institutions are working to adopt PoR as a new minimum standard for cryptographically proving how on-chain assets are collateralized in near real time.
One of the latest DeFi protocols to integrate PoR is noncustodial Ethereum liquid staking pool, Swell, which is utilizing PoR to ensure swETH tokens are fully collateralized by staked ETH. Last year, Swell also integrated Chainlink Price Feeds to estimate gas fees in USD. Swell’s team told Chainlink Today that both Chainlink integrations are emblematic of the protocol’s focus on transparency and reliability.
“Chainlink’s PoR helps ensure that swETH tokens are fully backed by staked ETH on a 1:1 basis, offering new levels of reassurance to our stakers,” a Swell team member said. “Alongside regular audits and a bug bounty program, this helps stakers to use Swell with confidence.”
SwEth is a receipt token representing ETH staked in the Swell protocol. PoR allows Swell’s users to verify in near real time that swETH is fully backed by ETH reserves on Ethereum’s Beacon chain.
In addition to employing Chainlink’s industry-standard decentralized infrastructure, Swell undergoes continuous auditing by leading blockchain security firms.
“That’s also why Swell’s staking pool is managed by a vetted group of best-in-class professional validators, who have the technical expertise and experience needed to avoid problems,” the team said.
They emphasized PoR as vital infrastructure to protocols like Swell and the DeFi industry as a whole, telling Chainlink Today, “Proving that the staked ETH collateral exists is essential for confidence in our service, bringing greater transparency to depositors and helping Swell operate with the ethos of Ethereum and DeFi: don’t trust, verify.”