Proof of Reserves Checklist
Assess a proof-of-reserves publication against what it would need to actually demonstrate solvency, covering asset control, liability commitment, completeness and the gaps the method cannot close.
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Assets without liabilities prove nothing
A published list of wallets holding a large sum tells you the entity has assets. Solvency is a comparison, and without a committed total of what is owed to customers there is no denominator, so the figure cannot support any conclusion. This is the most common shape of a weak proof of reserves: a large and verifiable asset number presented alongside no liability figure at all, which reads as reassuring and establishes nothing.
A point-in-time snapshot cannot detect borrowing
Assets borrowed shortly before the snapshot and returned shortly after appear as reserves and are not. No attestation taken at a single moment can distinguish them, which is a limitation of the method rather than a failure of any implementation. Frequent and unpredictable snapshots raise the cost of doing it and do not eliminate it, and this is worth stating plainly because it is usually left out of the surrounding claims.
Completeness is the gap nobody can close from outside
Individual customers can verify that their own balance appears in the Merkle tree. Nobody outside can verify that every balance appears, because an omitted account is invisible to everyone except its owner, who may not check. An exchange can therefore publish a technically correct proof over a tree missing its largest liabilities. This is the central limitation of the approach, and a publication that acknowledges it is more trustworthy than one that does not.
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Frequently Asked Questions
Does a proof of reserves prove solvency?
No. It can show assets and, with a liability commitment, compare them at one moment. It cannot show off-chain debts, cannot detect borrowed assets, and cannot prove the liability tree is complete.
What is the completeness problem?
Customers can verify their own balance is in the tree; nobody can verify that everyone is. An omitted account is invisible to all but its owner, so a technically correct proof can be published over a tree missing the largest liabilities.
Why does signing matter more than publishing an address?
Because anyone can point at a wallet. A signature from its key, or moving a nonce amount on request, is what demonstrates control.
Can the exchange count its own token?
It can, and it should not. A liability backed by an asset the issuer creates is backed by nothing under stress, because that asset falls precisely when it is needed.
Is an attestation the same as an audit?
No. An attestation confirms a stated procedure was followed at a moment. A financial audit examines the entity’s whole position, including obligations that never touch a blockchain.
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How to Use
Tick what the publication includes to score it.
Disclaimer: This tool is provided "as is" without warranty of any kind. Results are for educational and utility purposes.