Today, digital assets are on the rise, with billions of dollars traded across crypto exchanges on a daily basis. As with every financial market, there is a significant need for ensuring trust and transparency in the cryptocurrency market as well. By doing so, regulators and crypto investors or traders can be assured that their assets are completely reserved, and not being mismanaged.
Providing proof of reserve is very important for mainstream adoption in the cryptocurrency space. However, there wasn’t any clear path or method for auditing or providing these reports until recently. As more exchanges and crypto projects like Samecoin protocol, gradually adopts proof of reserves to ensure more transparency of the crypto market, one can easily predict more room for crypto adoption in the coming years.
In this article, meanwhile, we will look at the challenges of adopting proof of the reserve in the crypto market, and how projects like Samecoin protocol were able to draft a workable method to provide proof of reserve for its family of stablecoins – SameUSD and SameEUR.
Some Challenges in the Path to Proof of Reserves
Bitcoin and many other cryptocurrencies have benefited from immutability, credibility, and decentralized trust which are fundamental properties of blockchain technology.
Today centralized exchanges have invaded the market. Some might be creating blind spots in reserve reports which can put users at risk, as seen in the case of QuadrigaCX
For this reason, exchanges in the US, for instance, must provide state officials with audited versions of their financial statements to keep their money transmission licenses. Centralized systems brought about such concerns. However, by verifying proof of reserves, one significantly increases their trust levels of a specific blockchain project.
Here are some challenges in the path to proof of reserves.
- There are several issues created by centralized systems and exchanges that are not publicly scrutinized. These blind spots create users’ security, transparency, and trust issues.
- Many exchanges or blockchain projects give incentives to their early adopters. Although these incentives appear appealing to the customers, these exchanges are sometimes involved in loaning out customer’s assets or by partially reserving customer assets without their consent.
- It is challenging to determine the desired value of adequate reserves, explicitly.
Verifying the Credibility of Samecoin Protocol Assets
Samecoin’s team is incredibly committed to being transparent with its users. Today, the concept of proof of reserves is relatively new, and Samecoin’s team is at the forefront to establish a standard method of determining proof of reserves for digital assets in the Samecoin ecosystem.
Samecoin protocol is a revolutionary crypto project that features a utility token known as Samecoin (SAME) and stablecoins such as SameUSD and SameEUR. Samecoin’s family of stablecoins are inherently built to facilitate a more reliable way to make payments, using relatively stable coins with minimal changes in value.
Since the SameUSD is minted when another stablecoin is collateralized, this happens on the smart contract which is public. So anyone can check in etherscan or other blockchain explorers to verify that the total of all stablecoins deposited and SameUSD minted are equal at all times. Samecoin protocol ensures the burning of SameUSD if the collateralized stablecoins are withdrawn. With a transparent smart contract governing this process, Samecoin’s stablecoins are the most transparent ones in the market.
How to Verify SAME-stablecoins’ Reserve
Today, it is highly recommended that you verify the credibility of any digital asset before getting deeply involved with it. Samecoin protocol is one of the few digital asset projects that allow its users to verify the credibility of its Stablecoins without having to depend on a third party to audit and publish reports on a periodical basis.
Note that, SameUSD and SameEUR are backed by a reserve of top stablecoins and not directly by fiat currencies (USD and EUR) as is the case of USDT, USDC, and other stablecoins. So, the Samecoin protocol retains the actual stablecoins that backs SAME-stablecoins rather than holding the fiat currencies. This makes it easier to mint SAME-stablecoins while also ensuring verifiable assets.
Moreover, Samecoin’s stablecoins are all decentralized, meaning that the reserve and other related data can also be inspected and verified by anyone.