OKX Releases Proof-of-Reserves For Users To Verify Reserves Backing Their Assets
The Seychelles-based crypto exchange has released its proof-of-reserves, revealing information on reserve funds backing customer deposits. After the debacle of FTX, PoR is viewed as an industry standard for being completely transparent with users on the status of their crypto assets held in exchanges.
Since the astronomical collapse of FTX, investors are wary about the operations of centralized crypto exchanges. Now OKX, the world’s second-largest cryptocurrency exchange by trading volume, has unveiled new features that set an industry standard for transparency, risk management, and user protection. The exchange will allow its community of more than 20 million customers worldwide to have greater control over their assets, and verify the status of their funds and what is backing them via a proof-of-reserves (PoR) model.
The “Proof-of-Reserves” (PoR) page on the OKX website will provide information to customers regarding the company’s fund reserves. Users will also be able to self-audit the funds backing their crypto assets on the exchange, ensuring solvency. PoR will give users an overview of the company’s holdings and liabilities in Bitcoin (BTC), Ethereum (ETH), and Tether (USDT), the top three cryptocurrencies by market cap. According to the information given on the website, OKX is currently holding over 100% of each of the listed tokens under its reserves to be able to handle all customer withdrawals in the assets. The company will conduct regular PoR audits and constantly update data regarding its balances and the status of user funds within its reserves. The list will be expanded to include other cryptocurrencies listed on the Seychelles-based exchange. Customers can also check their own balances using the “view my audit” option, which will give them all information related to their personal holdings on the exchange.
OKX is also launching the world’s first exchange-based non-custodial wallet for institutional and high-net-worth clients. This will allow premium customers to keep the private keys to their crypto, view and track the wallets in real-time, and hold their assets separate from the company reserves.
“Our new Proof-of-Reserves page and self-audit feature give users the ability to verify that their assets are 100% backed. Third-party audits are also being conducted to provide additional reassurance on top of this. We believe that a far greater degree of transparency needs to be brought to our industry to allow us to build back stronger after recent events,” said Lennix Lai, Director of Financial Markets at OKX.
The exchange has also thought of users who don’t take the word of a centralized authority and would rather do their own digging. In addition to providing information on how PoR works, OKX has included two file documents on the website that will instruct users on how to audit reserves by themselves using a PC. The first document, titled “How to verify if your assets are included in the OKX Merkle tree?” explains how to query the OKX app API to get a Merkle tree of customer balances and compare those to data publicly available on the blockchain. The second document, titled “How to verify OKX’s ownership and balance of the wallet address?” explains how users can get a Merkle leaf of their own balances and verify if it is part of a larger Merkle tree.
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The bankruptcy of FTX was mainly caused by the company’s lack of transparency and mishandling of customer assets. This single event forced major crypto exchanges to implement a proof-of-reserves (PoR) model on their platforms. Binance and KuCoin have announced that they will provide proof of reserves in the coming weeks. Binance even published a page on its website titled “Proof of Assets” that gave details regarding the company’s on-chain activity for hot and cold wallets. Recently, Indian exchange CoinDCX conducted an audit with the help of blockchain analytics firm Nansen and made all information related to the firm’s on-chain and off-chain balances publicly available on the blockchain. Exchanges such as Gate.io, Bitmex, and Kraken have been providing PoR information way before FTX’s implosion.
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