Glossary
Proof of Reserves
Evidence that a platform holds enough assets to cover user balances, checked at a point in time.
Proof of reserves is an attestation or on-chain check that a custodian's assets exceed user deposits. It answers the narrow question of whether the money is there.
It is not an audit. It says nothing about whether the assets are unencumbered, whether liabilities are correctly recorded, or what happens between checks. A snapshot proof taken at a quiet moment can look perfect while the solvency position is deteriorating.
For a stablecoin issuer, a verifiable on-chain balance against outstanding supply is the meaningful test. For an exchange, treat a proof of reserves as one input, and treat the withdrawal experience as a more honest one.
Related terms
Airdrop
Free tokens distributed to wallet addresses, usually to reward early users of a protocol.
AMM
Automated Market Maker — a protocol that prices assets with a formula instead of an order book.
APR vs APY
APR is the yearly rate without compounding; APY includes compounding and is always higher.
ATH
All-Time High — the highest price an asset has ever traded at.
Bear Market
A prolonged decline, conventionally 20% or more from recent highs.
Bull Market
A prolonged rise driven by new demand, easy credit and rising confidence.