Thanks @Khan, excited to see this discussion about real-world assets (RWAs) for the GHO stablecoin.
At Chainlink Labs, we share the sentiment that RWAs have enormous potential to bring trillions of dollars worth of assets on-chain and into DeFi to create a more efficient, transparent, and secure financial system.
Asset tokenization can allow for increased liquidity of traditionally illiquid assets; greater accessibility to previously closed investment opportunities; greater transparency in ownership; and a reduction in administrative costs associated with the trading of these assets, including management, issuance, and transactional intermediaries. By combining platforms like Centrifuge and Aave to enable RWA collateral for GHO, DeFi can serve a broader market and unlock many opportunities for traditional and on-chain finance.
A critical aspect of transferring value on-chain via RWAs is directly connecting the off-chain world to the on-chain world. Secure oracles allow RWA collateral to reach its full potential by providing reliable information about the underlying reserve assets that can be used in several key processes such as minting, verification, managing, and more. If RWA collateral is to be introduced to GHO, we believe that Chainlink Proof of Reserve (PoR) can play an essential role in increasing user trust and enable GHO to reach its full potential.
The governance of GHO facilitators should take into consideration transparency when proposing tokenized assets as collateral. Aave has already pioneered the usage of PoR with BGD Labs’ integration of Chainlink Proof of Reserve into the Avalanche markets as a circuit breaker for cross-chain activity. With the upcoming launch of GHO, Aave has an opportunity to trailblaze again by integrating PoR into the minting process of GHO when tokenized assets are used as collateral.
In this implementation, anytime a facilitator (such as Centrifuge) requests to mint GHO using RWAs as collateral, the minting function can reference the corresponding PoR contract to help ensure sufficient collateralization of off-chain reserves. If the reserves are found to be insufficient, the minting transaction would be reverted, protecting the protocol. Furthermore, Chainlink PoR can provide the community with increased insight and transparency into the off-chain reserves of RWAs that back GHO.
Naturally, different tokenized assets will necessitate different oracle network structures and use case requirements. Since Chainlink interoperates with any API and off-chain system, Chainlink oracles can source this data from multiple avenues, including established auditing/CPA firms. We’re happy to collaborate with Centrifuge and other RWA stakeholders or facilitators in developing a PoR solution that works best for the protocol.