Proof of Reserve (PoR), is an attempt to bring transparency to centralized Crypto Entity’s through a verifiable auditing practice. Proof of Reserve are the next big step toward the coming Bull market. Being able to see if your favorite Crypto protocols won’t collapse overnight by tracking their finance. DAO are about to get way more interesting, Newsletters aren’t that convincing; showing the public wallet addresses of Reserves and Liabilities held in Trust is better (on-chain transactional proof).
Coinbase, Grayscale GBTC Trust won’t publish full details of its Proof of Reserves and Liabilities due to privacy fears or contractual obligations, Grayscale GBTC Trust is the largest legal holder of BTC.
Consequently, Binance underwent a Proof-of-Reserves and Proof-of-Liabilities verification at 22 Nov 2022 23:59:59 UTC, when a snapshot of their total reserves and liabilities was taken to determine the total collateralization ratio of their Bitcoin Asset Holdings.
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Binance Users, have the ability to independently verify that their assets were included in the total liabilities calculation through a Merkle-Proof. At the time of assessment, Mazars observed Binance controlled in-scope assets in excess of 100% of their total platform liabilities.
The collateralization ratio takes into account In-Scope-Assets lent through the margin and loans service offering which are collateralized by Out-Of-Scope Assets. The Merkle Root was compiled by hashing all client accounts into a single output. The Merkle Root for Binance PoR PR22NOV22 on 22 November 2022 is ab47221413078d47b0d9beb40447786904dae1ed2ff35e365416b5de6cd1089ee.
Binance tweeted, Proof of Reserve (PoR) is the first step to regaining and maintaining the trust of crypto users. With PoR, it helps to drive an industry that is safer and more transparent.
As part of #Binance’s user fund transparency work and Proof of Reserves updates, we're working with digital assets experts at global financial audit, tax and advisory firm, @Mazars_SA.
The first report from Mazars about Binance’s $BTC Proof of Reserves has been published today.
— Binance (@binance) December 7, 2022
One month after FTX and Alameda Research collapse, Bitcoin is at $16.8k, circa the minimum reached in June. A very good reaction to the collapse of the second biggest Crypto Exchange. This collapse will trigger exchanges executing Proof of Reserve and therefore strengthening the whole ecosystem.
Did the implementation of proof of Reserves and Liabilities (PoR) increase your trust in using CeFi services?