Swingby needed to protect users by preventing wrapped tokens from being minted or swapped if the reserves backing them became undercollateralized.
Chainlink Proof of Reserve (PoR) provides real-time verification of asset reserves on-chain—underpinned by cryptographic truth—helping prevent unbacked tokens from being minted or swapped.
“Swingby’s long-term goal is to provide all DeFi users the ability to move their assets from chain to chain in a safe, decentralized, and trust-minimized manner. What we needed was a way to suspend the ability for users to swap or mint new tokens if reserves become unbacked.”
Swingby is using Chainlink Proof of Reserve for automated on-chain verification from the largest decentralized collection of security-reviewed and Sybil-resistant node operators in the industry. By verifying that the amount of Bitcoin custodied in Skybridge’s reserves wallet matches the number of Wrapped Bitcoin (WBTC) tokens on Ethereum, Swingby can suspend the ability for users to swap or mint new tokens until the issue has been resolved.
This helps protect the bridge from unknown vulnerabilities that could de-peg the amount of reserves from the number of wrapped tokens and protect user funds. Ultimately Chainlink Proof of Reserve helps underpin a highly secure defense-in-depth architecture secure enough to protect tens of billions of dollars in value.
“Protecting user funds and maintaining the highest security standards through Chainlink Proof of Reserve’s reliable and timely monitoring of reserve assets is mission-critical for securing our cross-chain bridge.”
As soon as Chainlink Proof of Reserve went live, Swingby saw a large increase in swaps and new users on Skybridge due to the increased confidence that users feel when they have an accurate, highly available, tamper-resistant, and transparent source of information regarding the supply of wrapped assets.
The end result is WBTC and other wrapped assets becoming a more reliable form of collateral and payment throughout DeFi and other smart contract verticals. Ultimately, this supports the seamless flow of liquidity between blockchain networks.