Large crypto entities are sensitive to what is currently happening with the bear market and the bankruptcy of FTX. Last week, we learned that the Binance exchange launched a fund to revive the sector. Then, Bybit announced the launch of a support fund for institutional investors. It is the turn of Coinbase, the American giant in terms of crypto exchange services, to announce similar news.
A solution to encourage crypto players to prove their reserves
On November 25, the Coinbase team has published a blog post to announce a grant program. This is a solution to promote transparency in the crypto space and on-chain accounting. The amount of the subsidy program is $500,000. Coinbase has suggested that it wants this program to encourage other players to follow suit, providing evidence of their reservations.
He has declared : “ As a public company, we already prove our reserves using our audited financial statements. We are also exploring various innovative ways to prove reserves using more crypto native methods. We’re Announcing a $500,000 Developer Grant Program to Encourage Others to Do It Too“.
Coinbase explained that the fund aims to“ support individuals or teams advancing the state of the art of on-chain accounting, privacy preservation techniques related to proof of assets or liabilities, including the application of techniques zero-knowledge, or closely related technologies“.
Proof of reserve, to reassure investors
According to Coinbase, crypto companies should take care to reassure investors after the failure of the FTX exchange. To do this, they should show the latter that they can withdraw their funds at any time from the CEX. The exchange added: “Millions of people have recently placed their money and trust in FTX. But they were abused. This should never have happened“.
In this context, Coinbase explains that proof of reserves is a suitable way to ensure that a platform is solvent. It would allow “verify that a platform holds enough assets to match its users’ deposits“. “So if a user wants to withdraw their assets, they know they will get them back.», Specifies the crypto exchange.
Coinbase maintains that there is “several complementary ways to prove the reserves and liabilities of a crypto exchange“. He suggests that digital asset exchanges have both traditional methods and more advanced ways to prove their reserves.
Receive a digest of news in the world of cryptocurrencies by subscribing to our new service of daily and weekly so you don’t miss any of the essential Tremplin.io!
