The company stated that the product is being offered specifically to reinstate user trust in crypto exchanges.
Over the last few days, the crypto markets have been seeing a downtrend due to the near bankruptcy of the FTX exchange and other global economic issues. The crypto community has been in constant panic due to these incidents and has been contemplating solutions to such problems. Meanwhile, Chainlink Labs has offered a way out of this issue.
Taking to a Twitter thread, Chainlink has offered a service called ‘Proof of Reserve (PoR). Since users and customers had no real way to find out the exact amount of asset reserves held by exchanges for liquidity requirements and more, the only way for users to get that information was through audited reports of balance sheets made public by companies. To navigate this problem, PoR has been offered to allow projects across the internet to provide proof of their financial assets to users.
A wide variety of assets, such as cash balances, assets in the real world, etc., could be verified by PoR, claimed Chainlink. Using the example of a cross-chain asset vault, Chainlink demonstrated how PoR updated on-chain smart contracts. The tweet claimed, “Crypto should not keep recreating the flaws of the traditional financial system. Crypto should be about building an open and transparent global economy.”