BGD. Aave <> Chainlink Proof of Reserve. Phase 1 Release candidate

Reading time saved: 9 minutes

4 replies, 4010 views, 24 likes


Chainlink's Proof-of-Reserve (PoR) is being integrated into Aave v2 and v3 Avalanche to enhance protection against potential exploits on "bridged" assets, with the use of specific smart contracts and the introduction of a new role, PROOF_OF_RESERVE_ADMIN. After audits and community voting, the system was activated, but a false positive on the BTC.b asset led to its temporary removal from the Aave <> PoR coverage.

The discussion primarily revolved around the integration of Chainlink's Proof-of-Reserve (PoR) into Aave v2 and v3 Avalanche by Bgdlabs. The integration aims to add more protection against potential exploits on "bridged" assets in Aave v3 Avalanche, such as DAI.e, USDC.e, USDT.e, AAVE.e, LINK.e, WBTC.e, BTC.b and WETH.e. The proposed solution involves the use of a ProofOfReserveAggregator smart contract and a ProofOfReserveExecutor smart contract for each Aave v2 and Aave v3 Avalanche pool. The emergency actions in case of a problem with the backing of an asset differ for Aave v2 and v3 due to their different risk control mechanisms1.

Bgdlabs also proposed a new role, PROOF_OF_RESERVE_ADMIN, on the Aave v2 addresses provider smart contract to allow the ProofOfReserveExecutor of Aave v2 to freeze assets and disable borrowing. The addition/removal of assets with proof of reserve will be controlled via standard Aave governance procedures. The ProofOfReserveExecutor contracts will also be integrated with Chainlink Automation for better execution timing1.

The community was informed that the new system is non-invasive and built on top of Aave v2 and v3, so it should not affect existing platforms. However, it does add new procedures to the ecosystem, such as the connection with Chainlink Automation to monitor and trigger emergency actions, and the registration of PoR for new assets1. The audits of the system are being finalized by Certora and SigmaPrime. Once completed, a Snapshot vote will be created to activate PoR, followed by the deployment of additional smart contract components if approved1.

A Snapshot vote was published for the community to authorize the release of Aave-Chainlink Proof of Reserve Phase 1, targeting Aave v2/v3 Avalanche. The vote was set to open in a day and last for 5 days2. After the final approval via governance, the Aave Guardian is set to activate the Proof of Reserve system on Avalanche3.

The Aave Guardian activated the system for Aave v3 Avalanche, targeting assets such as DAI.e, AAVE.e, BTC.b, LINK.e, WBTC.e, and WETH.e. However, a false positive was detected on the BTC.b asset from the Proof of Reserve CL feed, leading to a temporary freeze of BTC.b and setting of LTV to 0. These actions did not affect the Health Factor of any position involving BTC.b. Due to the potential for false positives, BTC.b was disabled from the Aave <> PoR coverage until the issue is resolved4. The Aave <> Chainlink Proof of Reserve is now active for DAI.e, AAVE.e, LINK.e, WBTC.e, and WETH.e on Aave v3 Avalanche5.

Posted a year ago

Last reply 10 months ago

Summary updated 2 months ago

Last updated 08/12 04:39