7 Must-Reads on Proof of Reserves

With the collapse of a once-trusted exchange, many users are migrating to self-custodial wallets and using DeFi protocols to access trust-minimized financial applications. No longer can an institution’s reputation or brand be taken as a guarantee of safety. Users are demanding proof, not promises. 

To meet this surging demand for cryptographic truth, centralized institutions are increasingly offering proof of reserves—a way to prove the stability and presence of reserve assets and show users that they are solvent and have ample liquidity. 

However, it’s not just exchanges and financial institutions that need proof of reserves—stablecoins, cross-chain tokens, and tokenized real-world assets all benefit from the ability to verify their backing. Engaging in the Web3 ecosystem still requires a significant amount of trust, meaning there are countless ways to improve, decentralize, and trust-minimize the existing Web3 landscape using proof of reserves solutions.

Here are 7 must-reads to understand how proof of reserves works, why there’s no one-size-fits-all solution, and where centralized points of trust exist in the Web3 ecosystem. 

1. Proof of Reserves in 5 Tweets

In just five posts, this Chainlink tweet thread synthesizes what proof of reserves means, why it’s needed, the value it provides users, and what can happen when institutions don’t use proof of reserves. 

2. The Increased Demand for Proof of Reserves


In this Nasdaq Trade Talks video, Chainlink Co-Founder Sergey Nazarov explains why proof of reserves is here to stay:

“Systemic financial risk, contagion risk, counterparty risk are fundamental problems to all financial markets […] I think this [FTX’s insolvency] is a big enough jump in everybody’s attention that proof of reserves will become widely adopted.”

3. What Is Proof of Reserves?

gif showing how Chainlink Proof of Reserve works

A primer on why proof of reserves is needed and how it works, specifically in the context of on-chain ecosystems. Discover how proof of reserves can provide greater transparency into off-chain assets brought to on-chain ecosystems.

4. Stablecoins and Proof of Reserves

Diagram showing how Proof of Reserve can be used for off-chain assets

Today, stablecoins represent more than $140 billion dollars in value—more than $130 billion of which is backed by off-chain reserves. This article explores the clear opportunity for increased stablecoin transparency using proof of reserves.

5. Cross-Chain Assets and Proof of Reserves

Read this article to understand how proof of reserves can not only provide transparency into billions of monthly bridge volume for wrapped assets but also how reserve data can help mitigate systemic and contagion risk within cross-chain assets. 

6. The Importance of Proving Exchange Reserves

This tweet thread breaks down the importance of providing actually useful proof of reserves data for exchanges by tracking liabilities, and why Chainlink Proof of Reserve was first built to help safeguard DeFi against systemic risks. 

7. Creating New Standards of Trust-Minimization

A diagram showing the four quadrants of trust-minimization across Web2 and Web3

Why use proof of reserves? Understand the larger context behind this emerging movement toward transparency by going beyond exchanges to explore the fundamental societal shift that Web3 is pushing forward. 

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