Hassan Maishera
Binance, the world’s leading cryptocurrency exchange, released its Proof-of-Reserve System for Bitcoin on Friday, November 25th. The cryptocurrency exchange revealed that it would do the same for Ethereum soon.
In its blog post, Binance said it made this move as part of its commitment to total transparency in the cryptocurrency space. The crypto exchange said;
“Following our recent announcement outlining our commitment to transparency, Binance is releasing its Proof of Reserves (PoR) System, which is the next step in our effort to provide transparency on user funds. The launch of this feature will start initially with BTC, with other tokens and networks being added in the next couple of weeks.”
Proof of reserve is the term for assets that a crypto exchange currently holds in its custody. Binance explained that when a user deposits one Bitcoin, Binance's reserves increase by at least one Bitcoin to ensure client funds are fully backed.
The cryptocurrency exchange provided a snapshot of account balances and its own Bitcoin reserves as of 23:59 UTC on November 22, 2022. Binance revealed that it has 582,485 BTC in its reserves, while its users hold 575,742 BTC. Hence, giving Binance a reserve ratio of 101%.
Binance added that it intends to launch the next batch of PoR in the next two weeks, including additional assets. The crypto exchange will also involve third-party auditors to audit PoR results. Binance will also implement ZK-SNARKs for PoR, improving privacy and robustness, and proving the total net balance (USD) of each user is non-negative. The leading crypto exchange added that;
“Because Binance offers Margin and Loans services, the audit results will show the Net Balance, Equity and Debt of each user, where the Net Balance = Equity - Debt.
As such, there will be individual users having negative asset balances. We are hence also working to implement ZK-SNARKs, which will be used to prove those users have enough other assets to cover the funds with collateral. This will prove that the total net balances (USD) of each user is non-negative.”
Binance has been committed to total transparency since the FTX exchange collapsed a few weeks ago. The leading crypto exchange is also urging other crypto trading platforms to be transparent as it is a way to ensure that confidence in the cryptocurrency market is not shaken.
Binance has been expanding its presence in the cryptocurrency space in recent months. More positive Binance reviews ensure that the cryptocurrency exchange further cements its place as the world’s leading digital asset trading platform.
