The Network Firm’s On-Chain Proof of Reserves service leverages LedgerLens, The Network firm's proprietary attest technology, to bring off-chain reserve data on chain as frequently as every 30 seconds via Oracle Networks like Chainlink.
On-Chain Proof of Reserves bridges the gap from siloed off-chain data backing real-world assets by aggregating the various sources, applying a valuation model if necessary, and delivering the token and reserves data on-chain for use in smart contracts. On-Chain Proof of Reserves enables real-world asset issuers to provide trust and transparency to their customers by bringing reserve data related to the liabilities issued, and assets used to reserve those liabilities, on-chain in a Chainlink Proof of Reserve feed.
Using LedgerLens, The Network Firm provides entities such as issuers of stablecoins, asset-backed tokens, and crypto-backed financial products to provide trust and transparency to their clients by providing real-time data related to the liabilities issued, and assets used to collateralize those liabilities on chain, all compiled and provided by an independent CPA firm. LedgerLens connects to the relevant blockchains and financial institutions via API or other methods to provide up-to-date information to your constituents.
The Network Firm delivers the information via API to blockchain oracle networks such as Chainlink. Additionally, each customer has access to a “backend” admin panel to see historical information, error logs, and more.
What does the output look like?
The Network Firm delivers the following outputs to our clients for our Real-Time Reserves Service.
1. API Endpoint of Off-Chain Reserve Data
After compiling data from the relevant off-chain data sources using LedgerLens, TNF presents the compiled information via API for ingestion by oracle networks to bring on-chain.
2. Administrative 'Control Panel'
LedgerLens Client admins are able to access the "backend" control panel, that provides insights in the health of the system, information collected, logs, and more.
3. On-Chain Data Feed via Oracle Network
The information presented via API to the oracle networks is then brought on chain for use in smart contracts.
Example of On-Chain Proof of Reserves Clients
FAQ
What types of digital asset companies can use On-Chain Proof of Reserves?
Essentially, any type of Issuer who issues a token that is holding a real-world asset in reserve to "back" the token.
Stablecoins: whereby a token is issued on a blockchain, pegged to a fiat currency, and is backed by assets held in reserve by the issuer’s custodian on behalf of token holders.
Asset-backed Tokens: whereby a token is issued on a blockchain, and is pegged another type of instrument, such as a carbon-credit or ounce of gold, and is backed by assets held in reserve by the issuer’s custodian on behalf of token holders.
Real-World Assets (RWA): whereby an issuer custodies a variety of real-world, off-chain assets on behalf of customers for use in DeFi. Assets include tokenized stocks, bonds/credit, revenue-based financing (RBF), real-estate, and more.
Can I pair Real-Time Reserves with your On-Chain Proof of Reserves Service?
Yes! In fact, it is encouraged to provide real-time transparency to your "traditional" users expecting a CPA attestation, along with crypto-native users expecting an On Chain Proof of Reserves!
How long does it take to integration and begin reporting with On-Chain Proof of Reserves?
The standard integration timeline is 3 to 4 weeksonce development starts. Development start times are dependent on scoping and client onboarding processes.
However, TNF is currently working on solutions to drastically reduce this onboarding time to a couple of hours or less.
Additional time for the Oracle Network to deploy and test the feed may occur.
What is the cost of the service?
The cost includes a 1-time onboarding fee and an ongoing monthly SaaS fee. For 90% of clients, costs fall within the following ranges.
One-Time Onboarding Fee: $3,000 to $8,000
To integrate all sources, test all sources, build the control panel, build the public-facing dashboard, complete the required audit documentation.
Monthly License Fee: $1,500 to $4,000
Costs to maintain the system, test all sources periodically, complete bi-monthly audit documentation, and compensate for risk.
Monthly On-Chain Data Feed Fee: Varies
Paid to Chainlink Node Operators for delivery of the data on-chain
What drives the range on costs?
Every On-Chain Proof of Reserves engagement is unique. These unique characteristics that drive the range on costs are:
Number of Integrations: which entails how many banks, blockchains, and other data sources we have to integrate with. Additionally, we consider how the data must be extracted (i.e. API, daily statements, etc). For example, a simple stablecoin may only have 2 integrations (1 bank and 1 blockchain for example.). If you are closer to a “simple stablecoin,” you would be closer to the lower end of the band of integration and license costs.
Assets Under Attest: The larger the AuA figure, the higher the risk profile as the attestation provider.
Complexity: The other main variable is overall complexity. For example, if we have to read DeFi information from different protocols, or account for decays or other unique calculations, the effort increases and so does the associated cost to integrate. Additionally, if we have to host new or expensive to run blockchains, these are covered by the integration and license costs.
What oracle networks do you work with?
We work with any Oracle Network that can retrieve information via API. We have worked most closely with the Chainlink team in developing the On-Chain Proof of Reserve solution, but the service is oracle agnostic.
