After Binance, several Crypto Exchanges to implement Merkle Audit Proof
After Binance CEO and founder Changpeng Zhao’s appeal to increase transparency and industry health, several CEX will implement proof-of-reserves.
Few hours after revealing plans to acquire its competitor cryptocurrency exchange FTX, Binance CEO and founder Changpeng Zhao has shaken the digital assets industry again announcing that the company would soon begin performing proof-of-reserves through the use of Merkle Trees – a data structure that allows efficient and secure verification – and enable verification of its holdings to give complete transparency.
“All crypto exchanges should do merkle-tree proof-of-reserves,” tweeted Zhao, pointing to rumors of FTX facing potential insolvency. “Banks run on fractional reserves. Crypto exchanges should not. Binance will start to do proof-of-reserves soon. Full transparency.”
All crypto exchanges should do merkle-tree proof-of-reserves.— CZ 🔶 Binance (@cz_binance) November 8, 2022
Banks run on fractional reserves.
Crypto exchanges should not.@Binance will start to do proof-of-reserves soon. Full transparency.
Few hours later, several other major crypto exchanges like Gate.io, Binance, Huobi, OKX, KuCoin, Poloniex and Bitgate heed Zhao’s appeal announcing that they will use Merkle-tree-based proof of reserves system to establishing foundational trust in the industry and avoid any speculation.
It's critical for all major crypto venues to publicly share their auditable merkle tree proof-of-reserves or POF.— OKX (@okx) November 8, 2022
We plan to publish ours in the coming weeks (within 30 days). This is an important step to establish a baseline trust in the industry.
More to come...
Merkle-tree-based proof of reserves audits are already offered by Kraken to verify that crypto balances are backed by real assets held safely in their custody.