Does Proof of Reserves build your trust in exchanges?

[Incarts]

In 2022, the crypto industry was hit with a shocker– FTX was filing for bankruptcy. The leading exchange might have been guilty of mismanaging customer funds and was exiting the market, casting doubts as to whether they (and other exchanges) indeed hold the assets customers place in their care.

This distasteful collapse resulted in heightened distrust amongst traders, it then became apparent that Proof of Reserves (PoR) would go a long in reinstating customers’ trust. In a nutshell, a PoR refers to an independent audit of a crypto exchange, usually by smart contract audit companies to show that an exchange actually holds users’ assets as claimed.

Going forward PoR has somewhat become a symbol of security and transparency amongst exchanges, a commitment towards fostering unwavering confidence in their platform. Bitget for instance has gone a step further to meet an outstanding reserve ratio of 199% as seen on Coinmarketcap as at Nov 3rd 2023. This infact means that for every dollar a user deposits on the platform, an additional dollar is allocated to ensure absolute solvency and security of their assets.

Insecurity remains one of the industry’s dire limitations, however the leading exchanges are employing various measures to effectively tackle the loopholes and secure customers’ trust, PoR as one.

Having witnessed the unfortunate FTX shutdown, would you likely opt for exchanges with auditable PoR over the non PoR exchanges? 

 

 

 

[Maxicreed01]

Of course PoR has become an important factor to consider before making a choice of CEX recently. This has become the trend since the the ftx saga and i think most top CEX are now becoming transparent. Tho, more need to be done and i must appreciate the aforementioned exchange cos they did not also launch customer protection fund but the wallet to the fund has been accessible to the user and amazingly growing steadily.

Edited November 5, 2023 by Maxicreed01

[Jaja24]

Yes, proof of reserves can build our trust in exchanges as it provides transparency and accountability in terms of liquidity.

[Captainsaudi]

7 hours ago, Jaja24 said:

Yes, proof of reserves can build our trust in exchanges as it provides transparency and accountability in terms of liquidity.

Yeah I agree that POR can build our trust in exchanges only when the POR is transparent and can easily be verifiable by users. 

[Megamind]

On 05/11/2023 at 17:23, Incarts said:

In 2022, the crypto industry was hit with a shocker– FTX was filing for bankruptcy. The leading exchange might have been guilty of mismanaging customer funds and was exiting the market, casting doubts as to whether they (and other exchanges) indeed hold the assets customers place in their care.

This distasteful collapse resulted in heightened distrust amongst traders, it then became apparent that Proof of Reserves (PoR) would go a long in reinstating customers’ trust. In a nutshell, a PoR refers to an independent audit of a crypto exchange, usually by smart contract audit companies to show that an exchange actually holds users’ assets as claimed.

Going forward PoR has somewhat become a symbol of security and transparency amongst exchanges, a commitment towards fostering unwavering confidence in their platform. Bitget for instance has gone a step further to meet an outstanding reserve ratio of 199% as seen on Coinmarketcap as at Nov 3rd 2023. This infact means that for every dollar a user deposits on the platform, an additional dollar is allocated to ensure absolute solvency and security of their assets.

Insecurity remains one of the industry’s dire limitations, however the leading exchanges are employing various measures to effectively tackle the loopholes and secure customers’ trust, PoR as one.

Having witnessed the unfortunate FTX shutdown, would you likely opt for exchanges with auditable PoR over the non PoR exchanges? 

 

 

 

This is quite insightful, and has driven some curiosity in me and I had to check which exchanges has published their proof of reserve, turns out not many have done this in reality and the leading exchanges seems to take it very seriously, I guess this is to prove the effectiveness of their financial control even coinmarketcap recently announced updated proof of reserve for Bitget which totals $1.54 billion. I definitely will upt in for exchanges that audit their proof of reserve.

[Wakanda]

I think FTX collapse was more of a blessing in disguise even though several investors are still affected till date. The collapse actually necessitated the idea of PoR and user protection fund perhaps we might have heard of another terrible scenario. 

[collins244]

Since the collapse of FTX, traders have become more cautious in their trading activities. As a result, exchanges have started showcasing their proof of reserve (PoR) to demonstrate their trustworthiness to traders. Personally, I feel more confident trading on centralized exchanges (CEXs) that have been audited for PoR, as it provides an added layer of security.

[XTRAVAGANZA]

Like the popular saying goes ''fool me once, shame on you, fool me twice shame on me''. Going by this, sticking with exchanges that have auditable PoR is a no brainer for me. Cos i feel more confident that i wont wake up one morning and become a victim of another FTX saga. 

[Captainsaudi]

3 hours ago, XTRAVAGANZA said:

Like the popular saying goes ''fool me once, shame on you, fool me twice shame on me''. Going by this, sticking with exchanges that have auditable PoR is a no brainer for me. Cos i feel more confident that i wont wake up one morning and become a victim of another FTX saga. 

With the current trend in the crypto space, Transparent POR should be a prerequisite for choosing an exchange. Also users protection fund should be considered. 

[gandalf03]

On 07/11/2023 at 12:51, XTRAVAGANZA said:

Like the popular saying goes ''fool me once, shame on you, fool me twice shame on me''. Going by this, sticking with exchanges that have auditable PoR is a no brainer for me. Cos i feel more confident that i wont wake up one morning and become a victim of another FTX saga. 

Hmm! The memory of FTX saga looks fresh in my memory & wouldn't want to experience that again. The introduction of PoR has made users to choose a reputable as well as most solvent Exchanges to avoid incidence like the aforementioned saga that made me run at a loss, It has helped me a lot TBH.

[Captainsaudi]

15 hours ago, gandalf03 said:

Hmm! The memory of FTX saga looks fresh in my memory & wouldn't want to experience that again. The introduction of PoR has made users to choose a reputable as well as most solvent Exchanges to avoid incidence like the aforementioned saga that made me run at a loss, It has helped me a lot TBH.

FTX saga helps in the development of the crypto industry because lots of precautions has been made to avoid such scenario again. Also users have now learn the importance of choosing the right exchange and considering lots of factors other than CG or CMC ranking, trading volume and user base in making such choice. We must consider transparency of POR and users protection funds before choosing an exchange now. 

[BashJasper]

well, for me, to build trust requires transparency and the only way to be transparent to all users is to make their cold wallet address public which I think, Bitget has done because I saw it stated on Nansen some few months ago.

[parvashasan]

The steady improvement in Bitget's Proof of Reserves from January to April demonstrates excellent capital planning and risk management as their user base expands.