Proof of Solvency for Tokenised Assets

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Good to go?

Yes.

Yeah. Cool. So, I'm Sudeepan. Um I'm the co-founder and CEO at Chain Risk. So, um for both me and my co-founder, I think the relationship with EthIndia and Devfolio has been since the last 5 years.

Um uh for him it started with Polygon fellowship. For me it started with EthIndia grants. And uh yeah, since then uh it all started with two IIT dropouts starting out a company of their own based out of India. Um [snorts] so, we first started Chain Risk where we served some of the largest uh DeFi protocols of the world. We served Compound.

We served on a lot of protocols on Arbitrum. We did their risk management. Um and today I'm here with another product of ours, which is AFI. Um but what is AFI all about? But before getting into that, I would get into the first question, which is would you board of a plane that was last inspected in July?

Um I can think of a few airlines at least in my country where I today standing feel really unsafe to fly on. Um [snorts] but yeah, irrespective of which country you are from, you can essentially think of that and that and this question itself is pricking a few different parts of your brain into how valuable trust is when you are traveling for an important business meeting, let's say. So, how valuable will it be when you are actually putting your money into probably your hard-earned savings, probably investments for like large investment funds that they have borrowed from other people. So, you're putting that money into large DeFi protocols. So, how much amount of risk are you essentially taking for that?

So, we all know about this. This was a pretty famous incident that happened last year in November post the 2025 October crash which was essentially with Stream Finance XUSD multiple loops. The back-end capital was put into a directional trade on a centralized exchange and everybody lost their money in that and the entire stablecoin which they used to call stablecoin, but it is actually an yield-bearing asset at the end of the day got de-pegged by 74% within a couple of hours. So, in crypto usually token moves every second, but the proof moves four times a year. So, what's the way of proving, you know, any given asset behind the tokenized asset?

It is usually like quarterly reports by some of the largest companies in the world, let's say PWC, right? But, is it possible that the proof moves at the same speed as a token moves across any chain, whether it be an L1 or an L2? So, that's what we essentially built at AFI. At AFI, you can essentially prove the assets and liabilities which is the solvency and the ratios between them. It's written here just every hour, but that depends on the like requirements from client to client and the data sources that are there, but it can be scaled up to micro 7-second level.

Of course, all of these proofs are on-chain and all of these proofs are private. The coverage is public, but rest of it is private. But, what does it mean, right? So, what AFI does is let's say there are a bunch of assets [snorts] which are getting tokenized at this point of time. So, we go to the custodians, we We their data through their data sources.

We generate three kinds of proofs, Merkel proofs for data integrity. We generate the ZK proofs for solvency and also the TE attestations and then we finally enforce it on chain. The main problem is that you'll not be able to enforce solvency unless and until you have enforced it on the smart contract level. So for our all of our clients that we are working with

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the total number of assets minted on chain can never be greater than the reserves. So everyone sees the coverage but never nobody sees the book which means that everything remains private at the end of the customer but at the same time people will be feeling more confident in seeing it. So it's not just a report anymore. It's a rule because it's on chain. Every issuer, every proof is now public.

So you can go to our dashboard. It's afiprotocol.xyz. We have over 1.5 billion dollars in real world assets continuously verified across UAE and the Latin American countries.

And yeah, this is what I essentially instill in my team members and we constantly feel about it. It's the ethos, pathos and logos of our company. If it can't be proven, it shouldn't be trusted. So yeah, you know, there's my email.

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