Newbies in the crypto wallet – Following the FTX affair, in the midst of a crisis of confidence, a solution was presented by Binance. A process capable of carrying within itself the foundations of a reconstruction: Proof of Reserves. With hindsight, this solution is not completely satisfactory as we will see. But it has the merit of being implemented gradually on the exchanges. Decryption.
11 more tokens in Binance’s Proof of Reserve
Proof of Reserve (PoR). A term that gained momentum last November. When the whole world realized the fragility of crypto platforms. Exchanges that we thought invincible. And this, because of the immense fraud perpetrated by Sam Bankman-Fried, then boss of FTX. In an emergency, in order to reassure its investor clientele, Binance is developing a kind of proof of reservations cryptocurrencies. Verifiable proof at all times.
To do this, exchanges, such as Binance or Kraken, are starting to use computer technology called merkle tree (Merkle tree). Via this process, users are able to check at any time that their favorite tokens are indeed held by the exchange. In February, Binance went even further by integrating the ZK-SNARKs system. A way for the number 1 exchange to prove the amount of cryptos it holds while protecting sensitive and private information more securely.
Today, the instigator of this famous Proof of Reserve, technology incidentally already implemented for a long time at certain exchanges like Kraken, continues on its momentum. Binance has indeed announcement beginning of March the addition of 11 new tokens to its PoR.
“Our Proof of Reserves has just been updated. We just added 11 more tokens for a total of 24.”
Mask Network (MASK), Enjin Coin (ENJ), WazirX (WRX), The Graph (TSO), Chrome (CHR), Curve DAO Token (VRC), 1INCHPower Pool (PVC), Hashflow (HFT), SSV.network (SSV) not to mention our favorite crypto meme, the Dogecoin (DOGE).
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The Proof of Reserve, a shaky proof?
Binance thus increases the sum of its assets verifiable by PoR to 63 billion spread over 24 cryptos. This obviously includes Bitcoin (BTC) with $12.7 billion alone. Ethereum (ETH) with 7.1 billion. And the stablecoin USDT pegged to the dollar with 16.3 billion.
Although this reserve evidence is a first step, it has a major flaw. If it does indeed make it possible to measure the assets held by an exchange, it does not give no details on liabilities. Let’s imagine that Binance is in debt to the tune of 90 billion, it would do us a good job to know that it holds 63 billion in assets, wouldn’t it?
A fear that is all the more worrying since the big audit firms like Mazars have withdrawn. Probably scared by the fall of FTX and its potential repercussions, the latter have ceased all partnership with crypto exchanges, including Binance.
Fractures like the one caused by the fall of the FTX exchange take time to heal. Proof of Reserves is one way to move in the right direction, but it’s not enough. It will take time for trust to be rebuilt. As they say, the longer an entity (crypto, exchange, company, etc.) has existed, the more likely it is to continue to exist. The typical example of this resilience through bull runs and bear markets is none other than Bitcoin.
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