Proof of Reserves
Proof of reserves refers to methods used to provide evidence that assets claimed to back a token or financial product are actually being held. The evidence may involve onchain data, third party attestations, custodial information or a combination of different verification methods.
Why it matters to you
If a token claims to be backed by assets, investors need a way to assess whether those assets exist. However, proof of reserves should not automatically be treated as a complete financial audit. Investors also need to consider liabilities, custody, legal ownership and the rights they have to the reserves.
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