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Proof of Reserves

Autonomous, reliable and consistent reporting of reserves to the Digital Asset Economy

Using the H&T proof of reserve tooling, we are able to provide proof of reserve attestations to various asset issuers, such as stablecoins, tokenised commodities and real-world assets.

This service provides 3rd party assurance to the digital asset community, allowing stakeholders to be confident that the assets which they have custody over are backed by sufficient reserves.

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H&Ts proof of reserve service is powered by Chainlink, which brings end-to-end transparency to your on-chain and off-chain reserves through Chainlink Proof of Reserve.

H&T are proud to spearhead the future of proof of reserves attestations, using novel and ground breaking technology.

The proof of reserve service is available as a standalone service or can be utilised as part of a package of assurance products.

Methodology

H&T provides reputable third-party attestation by validating consistency between on-chain tokens and (typically off-chain) reserves assets. H&T’s proof of reserves solution combined with Chainlink Proof of Reserves can help ensure integrity of token balances and prevent smart contracts from minting unbacked tokens.
 

Steps

  1. H&T collects reserves data through various means, which often involves developing bespoke connectors per clients’ needs. This includes leveraging APIs from banks, custodians and other financial institutions, connecting to layer 1/layer 2 blockchain networks, compiling PDF/spreadsheet reports and using AI to parse data.
  2. H&T exposes an API to Chainlink to query the reserves data that H&T has compiled.
  3. When Chainlink Proof of Reserves detects an updated reserves balance from the H&T API (through either a regular “heartbeat” or where a sufficient deviation in value has occurred), Chainlink’s oracle node network will update to that figure.
  4. When a smart contract tries minting new tokens, it can first read the reserves balance through Chainlink’s oracle and then act accordingly (e.g. if the balance is insufficient, minting can be cancelled).
 

Fail-safes

Fail-safe features (called ripcords) are included in case errors or issues occur:
  • If there is a problem with a data source relating to the off-chain balance (e.g. bank maintenance, third-party server issues), H&T’s data feed will automatically pause. Where necessary, alternative means of off-chain data collection will be implemented (including manual intervention e.g. requesting bank reports).
  • Where external events occur that may materially impact our ability to verify reserve values (such as a bank failure), the data feed will be halted until we can obtain alternative means of gaining confidence about the balance.
  • If H&T detects that an asset reserves value is less than the token supply value (e.g. reserves have declined in value/quantity), a ripcord will be triggered notifying that there is an insufficient balance.

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