> But what if your private keys are actually owned by Alameda, who lent you them for the purpose of demonstrating solvency but then oops options blew up and they're gone now?
Private keys are never exposed at any point in the overall operation of the proof. In fact, the general structure provided as an example in the article itself doesn't expose anything of the sort.
Furthermore, the structure provided isolates the asset amounts down to each individual account, effectively siloing the damage to that particular account.
Even if the idea of lending them the assets is entertained, the flows out from their accounts would be recorded.
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> But what if most of your deposits were gold- or USD-backed assets and your assets are all shitecoin and a 51% attack happens to shitecoin and everybody wants their gold back?
1) The conversion over to the token in question would've already occurred & been recorded onto the overall proof.
2) The sudden collapse in value of the token doesn't warrant a refund in the same way that a sudden collapse in oil commodities/futures doesn't mean that a refund is permitted. The downtrend risk is explicit in the desire to convert from A to B.
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> But what if you do all this and you prove solvency, but your assets are all rated by S&P and oh crap just like in 2007 they rated everything triple-A but it's actually junk?
The scenario mentioned is a problem with the rating system itself, along with the overreliance of a handful of rating agencies with opaque rating systems/mechanisms. This is outside the scope of the article in question, but it's resolvable via the implementation of crowdsourced & automated rating systems that have clear grading rubrics & metrics, along with the inputs used to give said grades.
Private keys are never exposed at any point in the overall operation of the proof. In fact, the general structure provided as an example in the article itself doesn't expose anything of the sort.
Furthermore, the structure provided isolates the asset amounts down to each individual account, effectively siloing the damage to that particular account.
Even if the idea of lending them the assets is entertained, the flows out from their accounts would be recorded.
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> But what if most of your deposits were gold- or USD-backed assets and your assets are all shitecoin and a 51% attack happens to shitecoin and everybody wants their gold back?
1) The conversion over to the token in question would've already occurred & been recorded onto the overall proof.
2) The sudden collapse in value of the token doesn't warrant a refund in the same way that a sudden collapse in oil commodities/futures doesn't mean that a refund is permitted. The downtrend risk is explicit in the desire to convert from A to B.
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> But what if you do all this and you prove solvency, but your assets are all rated by S&P and oh crap just like in 2007 they rated everything triple-A but it's actually junk?
The scenario mentioned is a problem with the rating system itself, along with the overreliance of a handful of rating agencies with opaque rating systems/mechanisms. This is outside the scope of the article in question, but it's resolvable via the implementation of crowdsourced & automated rating systems that have clear grading rubrics & metrics, along with the inputs used to give said grades.