Crypto Giant Binance Releases Proof of Reserves System in Push Toward Transparency
Global crypto exchange giant Binance is releasing a proof of reserves (PoR) system to increase transparency following the FTX implosion.
Binance says they are committed to disclosing proof of reserves, which means releasing evidence of a one-to-one ratio of reserves to investors’ assets.
“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.”
Binance is first releasing Bitcoin (BTC) data, but in the coming weeks, they plan to release proof of reserves data for other tokens including Ethereum (ETH).
Binance says they have a 101% ratio of Bitcoin holdings to customer holdings with an on-chain reserve of 582,485 Bitcoin to their customer net balance of 575,742 Bitcoin, as of 23:59 UTC on November 22, 2022.
The company says that the data does not reflect its own corporate funds.
“When a user deposits one Bitcoin, Binance’s reserves increase by at least one Bitcoin to ensure client funds are fully backed. It is important to note that this does not include Binance’s corporate holdings, which are kept on a completely separate ledger.”
Binance is also giving investors a way to verify their own personal account of Bitcoin holdings using its Merkle Tree cryptographic tool, which “enables the consolidation of large amounts of data into a single hash.”
The proof of reserves system is aimed at allaying consumer fears they may not have the ability to withdraw their funds in the event of some financial event causing a bank run and liquidity crunch.
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Author: Daily Hodl Staff
