To counter the growing mistrust among crypto-investors following the FTX collapse, crypto exchanges have unanimously decided to share proof of reserve with the public as a way to demonstrate legitimacy, power depth, transparency, and security.
However, many started to break the PoR model shortly after many exchanges started to publish their reserve base.
Huobi and Gate have come under fire for allegedly sharing images using borrowed funds from each other. For some, this is a good initiative that can help to know how liquid and capable the exchange is. However, some feel that the PoR is an unnecessary formality that can be manipulated. They think that the exchange can easily outsource the funds to inflate the reserve, and once their reserve is published, the funds will be returned.
Proof-of-Reserves PoRs are independent third-party audits designed to provide transparency and proof that a custodian holds the assets it claims to own on behalf of its clients.
Proof of PoR Reserves Required for Various Exchanges As we've seen, FTX exploded this week after a CoinDesk report showed that its affiliate trading firm Alameda Research's June 30 balance sheet was largely made up of FTX's native token, FTT. All of this could have been avoided with PoR.
Proof of Reserve (PoR) is just the beginning of what exchanges should do from now on because of what happened. Presenting evidence is a big step, the important thing is that it is legitimate and true, we need to know and take into account that there are capable minds behind these exchanges and with the near fall of FTX it has been shown that they are capable of doing it wrong.
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Soon more hidden things will be known about SBF, not only that he had a backdoor, but that he didn't lose all the money he comments on, and the hacking rumors that I believe ended up robbing FTX itself.
🤔 Do you think PoR is necessary and is it a reliable way to show transparency and reveal how safe or secure an exchange or user pool is?
❓ About the incidence that affected FTX, do you think that similar situations can be avoided with proper insurance of user deposits and a well-secured SAFU or secured reserve?
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🤔🤔 It was also revealed that SBF has a secret backdoor for judging and using user funds without other employees knowing.
Is it right for CEX to use user funds or assets in their reserve for business purposes if they can always return them, or do you think the PoR assets and user deposits should not be touched/used by the depository?
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