Celsius integrates Chainlink Proof of Reserve

Celsius is integrating Chainlink PoR (Proof of Reserve) in collaboration with its DeFi engineering arm CelsiusX to create highly secure and auditable wrapped tokens that unlock cross-chain liquidity, according to a press release exclusively shared with Invezz.

This integration will be one of the first cases of using Chainlink (LINK/USD) PoR live to help audit and secure the on-chain minting, redeeming, and burning of wrapped cross-chain tokens.

Bridging wrapped ADA, DOGE, ETH to Polygon

The integration enables Celsius to bridge wrapped versions of Cardano (ADA/USD), Dogecoin (DOGE/USD), and Ethereum (ETH/USD) to Polygon (MATIC/USD) mainnet. Cardano, Dogecoin, and Ethereum community members will have access to DeFi ecosystems on non-native blockchains and more advanced cross-chain token utility.

Carl Hua, Chief Architect of Celsius and Head of CelsiusX, exclusively told Invezz:

Celsius Network Founder and CEO Alex Mashinsky added:

How Chainlink PoR secures wrapped tokens

To secure wrapped ADA (cxADA), you deposit ADA tokens to a Celsius wallet on Cardano. This launches the minting process. A Chainlink PoR data feed verifies the wallet’s balance. Then, a smart contract can mint cxADA depending on how many newly deposited ADA tokens there are. After that, new cxADA is deposited within a secure vault.

Verification mechanism

The token balance is verified by Chainlink PoR smart contracts. A smart contract can mint a corresponding amount of cxADA tokens on Polygon to ensure 1:1 collateralization when PoR shows vaults are overcollateralized. To redeem cxADA tokens back to ADA, the former must be burned before you can withdraw ADA to prevent undercollateralization.