Proof of Reserves

Universal's Proof of Reserves uses zkProofs and Coinbase API to enable trustless verification of asset holdings, ensuring every uAsset is 1:1 backed without exposing sensitive data.

Introduction

Ensuring transparency and security is a fundamental principle of the Universal Protocol. To achieve trustless verification of our reserves, Universal integrates Zero-Knowledge Proofs (zkProofs) with Coinbase Custody APIs, allowing anyone to independently verify reserve holdings.

This approach guarantees that every uAsset is fully backed by its underlying collateral, providing users with confidence in the protocol's solvency while maintaining privacy and security. Universal leverages Reclaim Protocol's zkfetch to power Proof of Reserves. Access Universal's Proof of Reserves here.

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How Proof of Reserves Works

The Universal Protocol utilizes a zkProof-powered verification system that enables users to confirm our reserves without requiring trust in a third party. Below is a step-by-step breakdown of how it works:

1. Fetching Reserve Data from Coinbase API

• Universal calls the Coinbase Custody API to retrieve:

  • Total balance of each underlying asset (e.g., BTC, ETH..)

  • Organization information (such as name and details)

• This data is essential to ensure that all uAssets are 1:1 backed by their respective reserves.

2. Generating a Zero-Knowledge Proof

• Instead of directly revealing API responses, Universal leverages the Reclaim zkProof system to cryptographically verify the authenticity of the retrieved data.

• A zkProof is generated for:

  • Balances – Ensuring that the reserve balances match the circulating supply of uAssets.

  • Organization Data – Validating that the data originates from Coinbase’s API without exposing sensitive information.

3. User Verification & Trustless Transparency

• Users can independently verify the proof by querying Universal's zkProof verification system.

• The verification process allows users to:

  • Confirm that our reported reserves match on-chain balances.

  • Ensure that Coinbase Custody holds the underlying collateral for uAssets.

  • Authenticate that no sensitive data (e.g., API keys) has been exposed.

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Why Use zkProofs for Proof of Reserves?

Traditional Proof of Reserves (PoR) methods require users to trust third-party audits or manual attestations. By integrating zkProofs, Universal eliminates this trust assumption and enhances security.

Privacy-Preserving: Verifies the data without revealing private API keys or sensitive account details.

Tamper-Proof: Uses cryptographic proofs to ensure that data cannot be altered.

Trustless Verification: Users do not need to trust Universal; they can independently verify reserves.

Automated & Continuous: zkProofs allow real-time reserve verification, reducing reliance on periodic audits.

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How to Verify Universal's Proof of Reserves

Users can independently verify Universal's reserves using our Proof of Reserves Dashboard. The process is simple and requires no special access permissions:

1. Visit the Universal Proof of Reserves Dashboard
2. Input the desired asset (e.g., BTC, USDC, ETH) to retrieve its proof.

3. The system will return:

   • The latest balance proof generated from Coinbase API data.

   • A cryptographic zkProof confirming the data’s authenticity.

4. Users can run the proof through a verifier smart contract or a local verification script to confirm its validity.