Two weeks after Binance first pledged to develop a proof-of-reserve (PoR) mechanism to respond to the FTX liquidity and bankruptcy fiasco, It was published the official answer.
In an announcement on Binance’s website, the exchange outlined how users can verify their holdings using this mechanism. Currently, the only token that can be verified through the Merkle Tree-based system is Bitcoin (BTC), although it has been announced that additional coins will be added in the coming weeks.
He also highlighted upcoming transparency updates, such as the involvement of third-party auditors to audit PoR results and the implementation of ZK-SNARKs in the PoR method.
Days after announcing its PoR intentions, Binance released details of its wallet address and on-chain activity.
Binance CEO Changpeng “CZ” Zhao tweeted about the latest update. Unsurprisingly, the Twitter community reacted to this, with many commenting positively on our transparency efforts.
This is a great initiative. Perhaps a future roadmap could include a separate Proof of Reserves page where users can see holdings on all exchanges (updated daily).
— Chief (@satn) November 25, 2022
Related: Proof of Retention: Can a Retention Audit Avoid Another FTX-Like Moment?
Binance was one of the first companies to start the trend of releasing proof of funds following FTX. Bybit released a secondary wallet address on November 16th, a week after the initial incident, along with major exchanges such as Bitfinex, OKX, KuCoin and Crypto.com.
Both Huobi and Gate.io were attacked after they released information containing loans. Cryptocurrency investment product provider Grayscale Investments said it was hesitant to disclose its wallet address due to security concerns.
On November 10th, Chainlink Labs offered PoR audit services to exchanges across the space as a solution to the trust issues that are starting to arise at centralized exchanges.
Market tracker CoinMarketCap shared on Nov. 22 that it has added a new feature, a PoR tracker for the exchange that has released the information.
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