What Is the ‘Proof of Liabilities’ Component in a ZKP Solvency Audit?
The Proof of Liabilities (PoL) is the cryptographic proof that the exchange's total customer deposits (liabilities) are accurately represented. This is typically achieved using a Merkle Tree of customer balances, where the exchange proves that the sum of all leaves equals the total liability, without revealing individual balances.
This is combined with a Proof of Assets to demonstrate solvency.
