The FTX fiasco pushes crypto platforms to be more cautious. They will also have to reassure investors who increasingly fear for their money. Just over two weeks after Sam Bankman-Fried’s empire crashed, Binance is taking drastic measures for transparency. Indeed, the largest crypto exchange in the world has committed to developing proof of reserve (PoR) and has just published details.
Binance materializes its commitment to the development of proof of reserves (PoR)
Following the FTX disaster, Binance had decided to engage fully in the development of reserve proof. She has just made public a reserve proof based on Mekdle tree. The crypto platform explains on its official website how it is possible to use this mechanism to check your balance. It must be said that everything is not yet perfect, because the only token that we currently use for verifications is bitcoin (BTC). But this is only a postponement, because the exchange adds that it will integrate new coins in the near future.
With the reserve proof, Binance wants to highlight the transparency which, very often, is lacking in this industry. The platform even plans to make updates in which, it could include third-party auditors to check its results. That’s not all, since it also plans to implement ZK-SNARK in PoR methods.
Binance has the merit of being one of the first exchanges to engage in PoR after the SBF debacle. In the aftermath, he had made his wallet addresses and on-chain activity publicly available. Several other crypto exchanges have followed suit. Reference is made to Bitfinex, OKX, Crypto.com and KuCoin to name a few. Not all platforms that lend themselves to PoR necessarily receive positive feedback. This is the case of Gate.io and Huobi, they received rounds of criticism, as their balance information included loaned funds. Other platforms like Grayscale Investments would also like to publish their addresses like Binance, but they fear security issues.
Conclusion
To remedy the security problems highlighted by the platforms, Chainlink Labs offers its PoR audit services. In the same vein, CoinMarketCap, the market tracker, has just announced the establishment of a new feature. It will track all platforms that make their information public.
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