The international cryptocurrency exchange OKX published its fifth proof-of-reserves (PoR) report as part of a trend it started in November 2022 to increase industry transparency.
The most recent version shows that OKX has $8.9 billion worth of Bitcoin. Hence, the BTC, ETH, and USDT reserve ratios correspondingly 103%, 103%, and 102%.
The exchange further improved the openness of its PoR system with this most recent update by making complete liabilities (the entire amount of customer deposits) available to the public.
Lennix Lai, the managing director of Global Institutional at OKX, discussed these additional measures for transparency with Cointelegraph.
Recent market developments, according to Lai, show that “crypto-native issues deserve crypto-native solutions.”
To maintain the industry’s integrity following the FTX crisis, many exchanges in the sector, including Binance, Crypto.com, and Bybit, have provided Merkle-Tree-based verification proofs.
“The blockchain and crypto/Web3 industry is built on technology that enables trustless transactions on public blockchains, and this inherent transparency is incredibly valuable.”
The new industrial maxim, according to Lai, is “don’t trust—verify.” He said that in the OKX ecosystem, over 300,000 customers have already seen the reserves or confirmed their responsibilities.
“The FTX crisis had a silver lining in that it made successful firms double down on security and transparency and motivated the industry to innovate in this area.”
The “splitting leaf nodes” method, used by the new transparency mechanism that made the total amount of user deposits apparent to the public, protects user privacy while dividing and rearranging account obligations in the tree.
Lai claims that in the upcoming weeks, OKX will also include zero-knowledge proof in our PoR.
Transparency in the larger financial industry has gained increasing attention since Silicon Valley Bank’s (SVB) collapse. In uncertain times, like the recent banking crisis, Lai advised:
“Proof of reserves can provide users with real-time, on-chain verification of reserves and liabilities through transparent technology — in this way, traditional finance differs from crypto.”
However, the Public Company Accounting Oversight Board, a U.S.-based agency that monitors audits of public firms, warned investors about PoRs back on March 8. These reports “don’t give any meaningful assurance to investors or the public,” according to the board.
Yet, businesses in the cryptocurrency sector keep working to increase openness. Binance also updated its PoR mechanism on February 10 to accommodate zk-SNARKS.