CRD Network is a sidechain run on Hyperledger Besu. The project was created to solve the issue of regulation throughout the DeFi market. With most of the market currently unregulated, users are prone to scams and unethical practices. CRD overcomes this issue by bringing real-world data online. This data includes financial history, banking transactions and real world asset value. It is made anonymous and fully usable by smart contracts, dApps and Oracles. Each contributor on the platform is fully licensed and can also help users pass their Known Your Customer (KYC) compliance. This will help platforms understand who their user base is.
The project uses digital proof of physical asset reserves to establish transparency throughout transactions. This procedure helps businesses save costs by removing the need for intermediaries, whilst simultaneously offering immutable origination. This creates a certainty to assets and thus reduces the need for audits, QC and compliance.
Proof of Reserve is a means through which crypto custodians, crypto exchanges and decentralized protocols prove to third parties that what is said to be in their reserves are accurate.
Though some of these platforms may operate as stated, investors and regulators often come with their expectations which may be centred around efficient reporting of crypto assets in their custody. And this must be done to maintain the trust of external participants and prevent potential dangers such as hacks and rug pulls.
As the records of off-chain transactions and proprietary databases are known to have potential issues, audits are often done to maintain money transmitters. However, the Proof of Reserve concept expands the scope of audits.
Proof of Reserves helps against counterparty risk as some assets may be liabilities to the books of other organizations. It is important to understand that the lack of crypto-specific reporting standards can result in such assets being reported twice. Such double reporting may lead to mispricing and issues in the long run.
The major goal of Proof of Reserves is to improve the quality and transparency of crypto-asset data that is published to an external marketplace.
It has been established that Proof of Reserves goes a long way to show that digital assets held by custodians, both centralized and partly decentralized, are truly the exact amount of assets they are holding for their users.
Proof of Reserve is essential to establishments, protocols and assets such as banks, asset managers and ETFs, DeFi protocols, crypto exchanges, stablecoins, wrapped tokens and centralized exchange.
In the case of decentralized protocols that provide self-custodial services where funds can be locked in smart contracts, Proof of Reserve could be used to audit smart contract codes to ensure that the assets are being held efficiently.
An Oracle is a third-party service that links real-world off-chain data from multiple sources to smart contracts. This data is important when custodial platforms, institutions or crypto/token issuers want to securely send data to an external party for verification purposes.
By triggering automatic audits, Oracles can send valuable pieces of information to an external party. While some protocols offer public Proof of Reserves to users and potential investors, some do so privately through the help of qualified auditors. Others offer both private and public Proof of Reserve and Oracles play important roles in all aspects.
By verifying the accuracy of assets in their custody, Proof of Reserve offers enormous value to establishments and protocols that use them. Some of these benefits include:
- Enhanced risk assessment, including system and asset risk
- Elimination of bad actors from crypto and financial market
- Protecting the integrity of the crypto market
- Protecting the interest of investors
- Increased degree of transparency.
Proof of Reserves can help smart contracts to use fast and accurate data to demonstrate the collateralization of on-chain assets. This ensures that a protocol or product is backed by an off-chain reserve such as digital assets locked in a smart contract, the US dollar or even gold.
CRD Network has the ability to work with decentralized oracles, using CRD nodes to routinely check custodial smart contracts, ensuring the collateralization process does not go beyond a specific limit.
This service enables financial institutions, crypto exchanges and protocols to demonstrate credibility to regulators and investors and also gain the trust of users.
Being engineered by programming pioneers to improve the basic features of the earlier blockchain, æternity has grown into a multi-functional scalable smart contract with a vast community of developers.
The æternity protocol accommodates large-scale enterprise use cases which include DeFi, DAO, voting and governance, payments, loans, shares and many more.
To this end, we seek to form a strategic partnership with the æternity for the potential adoption of the CRD Network Proof of Reserve. Being community-centric, we believe this partnership will demonstrate the credibility of æternity before potential investors and strengthen the community.
It would be great if we could discuss this proposal extensively.
Looking forward to hearing your thoughts.