Very rough outline of a proof-of-liabilities scheme for Cashu that has a chance of working.

I think this could be a game changer. If this works, users of a mint could publicly prove that the mint is inflating the supply and running a fractional reserve. That changes the entire trust relationship between user and mint. It's not a protection against a fast rug but it could be a protection against a slow rug (inflating the ecash supply).

Very stoked. I don't know of any proof of liabilities scheme in any other custodial system out there (please let me know). Proof of reserves is not described here, but we can assume it's ok via on-chain proofs (it's the easy part of this problem).