Solv’s Ryan Chow Defends On-Chain Proof of Reserves Against Saylor’s Criticism

Solv co-founder Ryan Chow shared his view on On-Chain Proof of Reserves challenges. He wrote about these issues in a May 30 X post. He referenced comments by Michael Saylor in his evaluation of risk factors. Chow noted that On-Chain Proof of Reserves presents too many potential attack vectors. He also said this approach lacks verification from major audit firms. In Q1 of this year, Solv adopted Chainlink’s Proof of Reserve solution. That system verifies 1:1 Bitcoin reserves on-chain without exposing actual wallet addresses.

Saylor Warns of Risks in On-Chain Proof of Reserves

Chow explained that Chainlink’s PoR helps build trust among investors. He said Solv focuses on Bitcoin-backed products for targeted finance markets. These include Shariah-compliant finance and RWA-backed Bitcoin yield product offerings. Chow also listed family office investors as a key potential group. He suggested these products might attract interest from sovereign wealth funds. However, Chow did not share specific adoption rates or market size information. He left details about actual uptake among institutions undetermined for now. This lack of data leaves observers with limited insight into product performance.

Michael Saylor recently warned that existing On-Chain proof-of-reserves methods carry high risk. He compared this practice to revealing private bank account details online to any viewer. Saylor emphasized that security must be the top priority for institutional participants. He argued that traditional audits by major firms remain the most trusted option. Saylor noted that on-chain balances alone do not cover liabilities or obligations. He said a full balance sheet audit demands checks on both assets and debts. Saylor pointed to Sarbanes-Oxley-style rules in the U.S. as a strong precedent.

Chainlink’s Proof of Reserve May Address Saylor’s Concerns

In a May 27 X post, Chainlink liaison Zach Rynes explained how the system protects wallet privacy effectively. Independent auditors verify Bitcoin reserves and sign data cryptographically for on-chain posting. A decentralized oracle network then publishes the signed reserve proofs publicly online. This process removes the need to reveal actual wallet addresses to observers. Firms like Coinbase, BitGo, and 21Shares now use this verification method. They apply it to support their Bitcoin-backed financial products for customers.

Despite Saylor’s audit emphasis, Chow said the market is rapidly evolving toward better security. He noted some projects have already tested new compliance measures alongside reserve proofs. As such, Chainlink’s PoR might be a move toward greater transparency. This method still faces debate over its ability to meet all audit needs. Critics argue it does not fully satisfy liability and balance sheet checks. Supporters believe combining reserve proofs and traditional audits could resolve these gaps. Ongoing trials will shape whether these reserve proofs become an accepted standard.

The Challenge of Balancing Transparency and Security in Crypto

This debate highlights a core challenge in crypto: balancing transparency with effective security. On-Chain Proof of Reserves offers a clear view of asset backing for users. However, it does not inherently reveal information about liabilities or debt obligations. Traditional audits provide comprehensive checks but demand more time and higher fees. Institutions weighing crypto exposure must consider both proof methods and audit processes. Future developments may blend on-chain proofs with traditional audits for improved assurance. Stakeholders’ opinions will likely drive experiments across verification and compliance strategies.

How Verification Standards in Digital Finance Are Evolving

As digital finance expands, regulators and market players must develop clear verification rules. Blending on-chain proofs with traditional audits may become an industry standard practice. Investor confidence will depend on both transparency and rigorous control measures. It remains uncertain which verification method will dominate in the coming years. Collaboration between projects, auditors, and regulators is essential for progress. Feedback from institutions and policymakers can also shape future best practices.