This new and innovative proposal frames an open source and trustless project that allows to demonstrate the solvency of a company without compromising the privacy of users thanks to cryptography.
“The Solvency Test seeks to raise the standard of transparency in the cryptocurrency industry and boost the trust of the ecosystem through open source so that more companies in the crypto sector can adopt it,” the company highlighted.
At the launch, which was held in their offices before members of public bodies and ecosystem leaders, they explained that their intention is to encourage the use of the code so that other market platforms can easily adopt it.
Cryptocurrencies: what is a solvency test
Basically, the solvency test It is a method that allows verifying that the total amount of the reserves held by the company (assets) is equal to or greater than the total amount of liabilitiesthus ensuring that user funds are available for withdrawal to prevent mishandling of assets without the alarms going off by the community itself.
“After a hectic year in the cryptocurrency industry, users will be able to see for themselves the solvency of the company to which they are giving custody of their funds,” he commented. Francisco LandinoLemon’s Blockchain Director.
Recently, the crypto company had presented its “proof of reserves” live from the app, a system that allows reviewing every 10 minutes on the blockchain all cryptocurrencies deposited by users in Lemon custody and monitoring the cryptocurrency pulse of the market: withdrawals of funds, tokens, amounts, networks and addresses.
Merkle test: Vitalik Buterin’s proposal
Now, the Argentine startup also launched its “liability test”which uses the Merkle-Sum Tree model proposed by Vitalik Buterinfounder of Ethereum, for consolidate the sum of the funds of all the users of the platform without exposing the identity of any of them and without intermediaries to certify it.
Merkle Tree Sum technology is a method of verification of information integrity in distributed systems that allows verifying the authenticity of the data without the need to transfer the entire datawhich improves privacy and security. It is a “digital signature” that is used in blockchain and other areas to ensure that information has not been tampered with.
“This technology opened the doors for us to face a healthier, more transparent ecosystem and, above all, Without hope. Any exchange or company that handles crypto assets can safely expose their Proof of Passives, respecting the privacy of their users.“, he pointed Augustine KingOwner of the Lemon Product.
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Users, exchange and lost trust
Both the “Proof of Reserves” and the “Proof of Liabilities” make up the “Proof of Solvency” presented.
Ecosystem developers are participating in the code checking process to ensure that it was secure and met the quality standards necessary to ensure user confidence in its implementation.
Therefore, by submitting its crypto-based Proof of Solvency, Lemon is confident that serve as a kick-start for it to be widely adopted by companies in the industry and become a standard of local transparency and solvency.
Being an open source project, it has the potential to be a game changer and improve industry confidence..
In this sense, the company explained that its code is safe and audited by industry specialists, so the user should not follow any instructions that are not from Lemon, or enter another link that they have not received from the official email of notifications from the platform, or information downloaded from the app.
By last, to make your task easierUsers can access more information and the step by step for verification in the guide that the company uploaded on its official Wiki.