How Does PoR Relate to the Collateral Requirements of a DeFi Lending Protocol?

For a DeFi lending protocol that accepts a reserve-backed asset (like a stablecoin or wrapped token) as collateral, the Proof-of-Reserve (PoR) is crucial. A successful PoR verification assures the protocol that the collateral asset is genuinely backed, reducing the risk of a sudden de-peg and a loss of collateral value.

This verification directly supports the protocol's decision on the required collateralization ratio and the loan-to-value (LTV) limit it is willing to offer.