𝑾𝒉𝒂𝒕 𝒊𝒔 𝑷𝒓𝒐𝒐𝒇 𝒐𝒇 𝑹𝒆𝒔𝒆𝒓𝒗𝒆𝒔? 𝑫𝒐𝒆𝒔 𝑷𝒓𝒐𝒐𝒇 𝒐𝒇 𝑹𝒆𝒔𝒆𝒓𝒗𝒆𝒔 𝒎𝒂𝒌𝒆 𝒄𝒓𝒚𝒑𝒕𝒐 | Welups Official
𝑾𝒉𝒂𝒕 𝒊𝒔 𝑷𝒓𝒐𝒐𝒇 𝒐𝒇 𝑹𝒆𝒔𝒆𝒓𝒗𝒆𝒔? 𝑫𝒐𝒆𝒔 𝑷𝒓𝒐𝒐𝒇 𝒐𝒇 𝑹𝒆𝒔𝒆𝒓𝒗𝒆𝒔 𝒎𝒂𝒌𝒆 𝒄𝒓𝒚𝒑𝒕𝒐 𝒕𝒓𝒂𝒏𝒔𝒑𝒂𝒓𝒆𝒏𝒕?
CEX exchanges are offering customers a way to verify the status of assets held on their platforms. Through this, customers, and users can determine with certainty that the institution holds these assets with equal or excess reserves to guarantee deposits and the customer will always be able to withdraw their money. This process is done through the Proof of Reserves (PoR) system.
𝙋𝙤𝙍 𝙘𝙤𝙣𝙨𝙞𝙨𝙩𝙨 𝙤𝙛 𝙩𝙬𝙤 𝙥𝙖𝙧𝙩𝙨:
A current record of customer token deposits (known as liabilities)
A group of tokens held in a set of exchange addresses (also known as assets).
As a custodial financial institution, centralized exchanges (CEX exchanges) are not allowed to use customer funds for other purposes, so both assets and liabilities must match.
𝙒𝙝𝙮 𝙞𝙨 𝙋𝙧𝙤𝙤𝙛 𝙤𝙛 𝙍𝙚𝙨𝙚𝙧𝙫𝙚𝙨 𝙞𝙢𝙥𝙤𝙧𝙩𝙖𝙣𝙩?
Changpeng Zhao, CEO of Binance pointed out the status of the second-largest cryptocurrency exchange – FTX. After the fall of FTX, many Proof of Reserves tools quickly emerged, each providing crypto investors with a way to track their assets or financial activity on exchanges. Through this, users can be sure that exchanges hold assets with equal or excess reserves to guarantee deposits and customers will always be able to withdraw their holdings.
𝘼𝙥𝙥𝙡𝙞𝙘𝙖𝙩𝙞𝙤𝙣 𝙤𝙛 𝙋𝙧𝙤𝙤𝙛 𝙤𝙛 𝙍𝙚𝙨𝙚𝙧𝙫𝙚𝙨
For users:
- Provide a means to verify the user's assets
- Allows conducting due diligence on custody platforms
- Actively check transaction activity
For institutions or exchanges
Provide a means of maintaining and regaining users' trust
The opacity discovered in recent events is increasing the fear index for investors using custodial institutions for trading or other financial activities. Reputable institutions can regain this lost trust by developing good Proof of Reserves and making them available to their clients.
Read more:
https://outsidetheblock.com/proof-of-reserves-la-gi.html
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