- Binance’s proof of reserves system initially shows results for the flagship cryptocurrency Bitcoin.
- The cryptocurrency exchange will also add tokens and networks, as well as implement ZK SNARKs.
- After the shock collapse of FTX, crypto exchanges want to prove that they have the assets they need.
Binance has published the proof-of-reserve system (PoR), just days after Changpeng Zhao, the CEO, pledged to have it in place following collapse of rival FTX.
The market crashed after the bankruptcy and the contagion that ensued. Binance Coin’s price fell to as low as $250. Bitcoin’s price fell to $16,000, its lowest point since 2020.
Multiple exchanges responded by publishing a snapshot of the assets they had. But the crypto community largely noted the snapshot of assets alone wasn’t enough – there was a need to have exchanges’ liabilities also available.
Binance’s proof of reserves showed a 101% ratio
It is available in its update on the issueBinance noted that its users can now verify the exchange’s holdings. As for what’s possible now, Binance announced the mechanism will initially support Bitcoin. Over the coming weeks, Binance will be looking to add more tokens and networks.
Binance will also permit third-party auditors audit the proof of reserves results. ZK-SNARKs will be implemented to enhance privacy and strength.
“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,” the Binance team wrote.
A snapshot taken on 22 November 2022 at 23:59 (UTC) shows Binance’s on-chain Bitcoin balances stood at 582,485.9302, while customer net balance was 575,742.4228. The reserve ratio as shown in the snapshot was 101%. The margin was 6,743 BTC.
Customers of Binance can check if the exchange is holding their crypto as they should.
