In light of all the crypto collapses with companies like FTX and Alameda Research these past months, many crypto users and holders must be wondering what other exchanges might be doing with their tokens and assets.
Binance, the largest crypto exchange in the world, has decided to put in more security and transparency measures to ensure that users’ assets are secure and available even when all its users want to withdraw their funds at all times.
The system will have enough liquidity for such withdrawals while still being stable during transactions. Binance announced via its official sites explaining what “proof of reserve” (POR) is, “When we say the proof of reserve, we are specifically referring to those assets that we hold in custody for users.” That means we are showing proof that Binance has funds to cover all of our users’ assets as well as some reserves.
Binance decided to launch a proof-of-reserve system to prove that the exchange is healthy. Binance’s main goal for this launch is to demonstrate that it holds the assets of its users securely in the same token that they have initially deposited; currently, the only token available for such verification is the Bitcoin (BTC) token, and more coins will be added in the coming weeks.
To prove its transparency, Binance released the value of all users’ assets. The assets on Binance add up to over 67 billion dollars worth of cryptocurrency. The token percentages on the Binance POR balance sheet are as follows:
30.61 % in BUSD
22.76 % in USDT
13.97% in BTC
10.70% of BNB
8.74% in ETH
13.22% in other cryptocurrencies
Binance CEO CZ said, “I think 2022 is a nasty year. The last six months were like, Too much has happened now that the industry is healthier.”
With the Proof of Reserve system, every Binance user can verify the bitcoin they own on the Binance platform using the Merkle tree and have it verified by a third-party audit app to show transparency in liquidity.
Even if Binance has successfully developed its proof of reserve, how sure are we that users’ assets are safe? Share your opinions in the comments.
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