Solvency Protocol

What is better than trust? Proof.

"For the first time in our lives we have the tools to mathematically guarantee trust in our financial institutions.”

In the first quarter of 2019, $1.2 billion worth of cryptocurrency was stolen, including $851 million lost by Bitfinex alone and $356 million stolen from custodial services - of which over 50% were a result of scams. These events erode investor confidence and hinder mainstream adoption of digital assets.

As digital asset custodians we believe that we have a responsibility to do more to provide our users with the highest levels of certainty and peace of mind that their funds secure. While our goal is Effortless Investing we also want our users feel safe and comfortable when investing with Bamboo.

A big step towards achieving that comes from what we are calling our Solvency Protocol. It is a way for us to prove that we have the assets to cover what we owe every user in total (i.e. we haven’t stolen or lost any user funds or run a fractional reserve). Our protocol leverages the publicly verifiable properties of these digital assets to ensure that these proofs are un-forgeable (that is Bamboo cannot generate a falsely valid proof). It also means that every user in Bamboo will be able to audit and verify for themselves that Bamboo is solvent - a level of transparency that has never been done before.

The technicals

Our Solvency Protocol allows organisations to make publicly verifiable assertions about the state of their finances. The output of the protocol is a Proof of Solvency that participants in the system can then use to verify if, at the time of the assertion, the system is solvent (e.g. assets meet or exceed liabilities).

The Proof of Solvency comprises two components: a Proof of Assets and a Proof of Liabilities. To ensure the highest degree of privacy, we employ well-known techniques such as homomorphic commitments and zero knowledge proofs throughout the protocol. This prevents external parties or even other participants from learning anything about other users (e.g., their balances).

Albacore Partnership

Bamboo has partnered with Albacore to accelerate our efforts in developing a publicly verifiable Proof of Solvency. Bamboo and Albacore will form a joint venture dedicated to the development and deployment of proof of solvency.

Albacore is led by Ilyas Ridhuan and Michael Ford. Ilyas has a background in Physics and Computer Science and developed an interest in Bitcoin in 2013, spending two years using blockchain technology to tackle the issues of electronic voting. Michael discovered bitcoin in 2010, and became a contributor to the Bitcoin Core project in 2012, most recently becoming a maintainer in 2019. Ilyas and Michael will be working directly on Bamboo's proof of solvency, and we're excited to have them as part of our team.

Roadmap 2018

1. Development begins on an End-to-end publicly verifiable Proof of Solvency Protocol.
2. Working prototype of Proof of Solvency, enabling users to verify that they are included in the Proof of Liabilities and check the correctness of the Proof of Assets.
3. Exploring general applicability of Proof of Solvency to allow organisations to make assertions for assets outside of natively digital assets (e.g. Precious metals)

Roadmap 2019

1. Research into application of Zero Knowledge Proofs into the Proof of Solvency Protocol to improve user privacy.
2. Implementation of the BulletProof cryptosystem and Homomorphic commitments into the Proof of Solvency Protocol.
3. Completion of technical paper outlining specifications of the Proof of Solvency Protocol.

Roadmap 2020 - 2021

1. Public release and integration of the Zero-Knowledge Proof of Solvency into the Bamboo application, enabling users to verify the proof and thereby the state of their funds held by Bamboo.
🛠 In Progress
2. Improvement of tooling and support services to help Bamboo users verify the proof.
🛠 In Progress

Next Steps

Bamboo is moving towards the widespread deployment of its proof of solvency, cultivating greater levels of consumer trust in the broader blockchain and financial technology communities. While the first implementation is the Bamboo application, the technology has broad relevance and applicability amoung other industry veriticals including the traditional financial sector. We look forward to working with Albacore to accelerate the widespread adoption of proof of solvency.