How can the cooperation between China Link and Avalanche lead to the evolution of “DeFi”?
Chain Link (LINK) is recognized as a leading player in the decentralized finance (DeFi) space, a trusted source of information from the world outside the blockchain, for many smart contracts implemented. Avalanche (AVAX) is also a scalable and fast network that has recently made great strides in the field of DeFi.
According to Wallex and quoted by U.today, these two entities have recently partnered to bring more transparency to oracles by implementing a decentralized Proof of Reserve (PoR) model. This collaboration could be a turning point and a big step forward for the next wave of DeFi adoption in the blockchain industry.
What is China Link Proof of Reserve (PoR)?
Chain Link’s proof of reserves feature is provided with the aim of providing detailed information about the health status of collateral backed by off-chain assets, thereby providing security and transparency for investors. This feature is managed by a decentralized network of oracles. These actors guarantee that the audit is done independently and in real time.
This feature helps users to always be sure of the financial health of capital custodians that operate off-chain. Instead of relying on paper collateral provided by platforms, Chainlink enables automated on-chain audits. This feature will provide more transparency to the cryptocurrency ecosystem.
How can the combination of this feature and the Avalanche network transform DeFi?
The partnership of Avalanche and Chainlink can bring significant benefits to the users of the decentralized applications of this network. This cooperation has made it possible to implement several security measures such as verifying the health of collaterals consisting of multiple assets, preventing arbitrage opportunities and shutting down the system in emergency situations, which effectively reduces the possibility of cross-network abuses.
In addition, the transparency of the Avalanche network is also improved. For example, users can now be sure that their WBTC reserves on Avalanche are actually backed by real Bitcoins on their native network.
Also, the Avalanche network is a popular choice for hosting DeFi protocols with its high-speed smart contract support, scalability, and low transaction fees.
The network uses a consensus mechanism called Avalanche-X that allows for easy creation of custom “subnets”. Also, the time to complete transactions in this network is less than one second.
Another factor that proves the prosperity of DeFi in Avalanche is the number of bitcoins in this network. This month, the number of rapped bitcoins available on Avalanche surpassed that of the Lightning Network.
The Lightning Network is a layer two solution for the Bitcoin network that allows users to send transactions at a higher speed and lower cost. This solution is provided in order to increase the scalability of the Bitcoin network.
What may have tarnished Avalanche’s reputation a bit is that in 2021 and 2022, inaccurate financial data regarding the total value locked in the network and its actual transaction rate were released, creating a sense of uncertainty about the network. . However, the user community of this digital currency is very dynamic and active and has a good contribution to the development of this ecosystem. With the help of its remarkable technical features and human capital, this network may soon overcome its dark past.
How can the cooperation between China Link and Avalanche lead to the evolution of “DeFi”? The first time in the blog Valx. appeared.