Showing posts from January, 2023

Hollow Promises

Today, I bring you the sad tale of a crypto lender that promised safety and high returns to its depositors, but whose promises have proved to be as hollow as its name.  Donut Inc., a self-proclaimed DeFi" lender, has a "Proof of Reserves" section on its website . This is supposed to reassure customers that their deposits are matched one for one by the platform's liquid assets. I am firmly of the opinion that "Proof of Reserves" statements prove nothing without a corresponding statement of liabilities, since deposits aren't the only form of liability, and encumbered assets can't back deposits. But in this case, the "Proof of Reserves" is worse than useless. It is actually fiction. And it conceals a truly dreadful situation for Donut's customers.   As of today, this is what the "Proof of Reserves" says:  By itself, this doesn't prove anything at all. It's just an unsupported statement of what the company calls "ass