Chainlink Brings Onchain Proof of Reserve to RenVM
Automated Auditability of RenVM’s Cross-Chain Assets
We’re excited to announce that Ren has collaborated with Chainlink on a new Proof of Reserve mechanism (live on testnet and soon mainnet) to improve the transparency and auditability of its cross-chain assets bridged into the DeFi ecosystem, starting with renBTC, renBCH, and renZEC.
By leveraging Chainlink’s highly secure and reliable decentralized oracle network, smart contract applications on the Ethereum blockchain now have the ability to autonomously verify on-demand the current collateralization of each cross-chain asset minted within the Ren ecosystem!
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RenVM has close to $900M bridged, and $270M in cross-chain assets locked and secured by its nodes, showcasing real market demand for wrapped assets in the DeFi ecosystem. Ensuring these wrapped tokens are fully collateralized by assets on their native chain is critical to the security of cross-chain protocols like Ren. As such, we are adopting Chainlink’s Proof of Reserve as a highly secure and reliable mechanism for users and dApps to leverage in order to audit the collateralization of Ren assets in a fully automated and censorship-resistant manner, removing the need to rely on manual off-chain verification such as reading a monthly audit report.
How Chainlink’s Proof of Reserve Works for RenVM
In order to enable the autonomous and trustless verification of the reserves backing the Ren ecosystem, smart contract applications can now simply call Chainlink’s Proof of Reserve Reference Contracts, which store data about the current reserves of Ren assets. A Proof of Reserve Reference Contract is deployed on Ethereum for each of the following cross-chain assets: renBTC, renBCH, and renZEC.
Chainlink oracles keep the Proof of Reserve Reference Contracts up to date with the most recent collateralization by monitoring the addresses on the Bitcoin, Bitcoin Cash, and Zcash blockchains that hold these reserves, of which are controlled by Ren Darknodes. Chainlink nodes monitor these addresses off-chain, and only push aggregated on-chain updates to the Proof of Reserve Contracts when they notice a deviation (change) in the reserves beyond a defined threshold (e.g. 1%), likely the result of new minting/burning events. Leveraging this update model ensures fresh data is always delivered on-chain when there is any relevant deviation in the amount of reserves, while simultaneously reducing unnecessary on-chain transactions when there are very little to no changes.
If a black swan incident were to occur, such as a deviation between the amount of assets reported by the Proof of Reserve contract and the amount of minted Ren assets on the Ethereum blockchain, decentralized applications can employ customized logic to swiftly protect user funds. For example, money market protocols that use Ren assets as collateral can check their true collateralization before allowing any borrowing/lending interactions to occur. This autonomous and trustless protection of user funds is only made possible by the ability to atomically interact with the reserve data hosted on-chain, which is continuously updated by Chainlink oracles.
We selected Chainlink as our go-to oracle solution because it’s the most decentralized, time-tested, and widely adopted oracle in DeFi, currently securing billions of dollars live on mainnet for leading applications like Aave and Synthetix. Chainlink’s Proof of Reserve oracle networks are secured by a decentralized network of Sybil resistant node operators, ensuring data updates are highly available and resistant to manipulation. It’s also highly transparent, as any Ren user can independently monitor the performance of the oracles maintaining the Proof of Reserve Contract in real-time using their on-chain visualizations, which show the most current reserve data number, how the contract updates, which nodes secure it, and much more.
Supporting Chainlink’s Price Reference Data Feeds
Additionally, we will be supporting Chainlink’s Price Reference Feeds as a means for DeFi applications to fetch the true market-wide price of RenVM based assets, further ensuring they remain highly reliable forms of collateral throughout DeFi. Chainlink’s Price Reference Data is widely used throughout DeFi, making it the go-to price oracle for DeFi protocols needing to reference the price of Ren assets.
These two integrations in combination provide developers with the tools they need to build innovative DeFi products that are highly secure thanks to accurate oracle reports.
We’re excited to be working with Chainlink and confident that users will value the independent checks on both their prices and the reserves backing them. Not only will these Chainlink-powered features increase user trust in the Ren ecosystem and the DeFi economy as a whole, but we can scale the security of these features as the total value locked in Ren continues to rise.
“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,” stated Loong Wang, CTO, and Co-founder of Ren. “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 manually track the reserves on their own.”
Onward and Upward,
— Michael Burgess, COO
Chainlink is the most widely used and secure way to power universal smart contracts. With Chainlink, developers can connect any blockchain with high-quality data sources from other blockchains as well as real-world data. Managed by a global, decentralized community of hundreds of thousands of people, Chainlink is introducing a fairer model for contracts. Its network currently secures billions of dollars in value for smart contracts across the decentralized finance (DeFi), insurance, and gaming ecosystems, among others.
Ren is an open protocol that enables the permissionless and private transfer of value between any blockchain.