Is the Ethereum ecosystem interested in creating a formidable Proof of Reserve system?
It all started when the collapse of FTX in the crypto space ignited a keen interest by several exchanges to use Proof of Reserve as a transparency tool. Binance, Crypto.com, and OKX are amongst the top exchanges that have shown interest.
Speaking at an AMA session with a 40,000 audience, CZ explained that Proof of Reserve is a mathematical way of showing the balance an exchange has using the Merkle Tree Algorithm. It helps users verify if their assets are part of the balance of an exchange.
Furthermore, he revealed that Vitalik Buterin, co-founder of Ethereum, wants to help create a Proof of Reserve protocol for the industry. “I spoke with Vitalik,” the Binance CEO said, and he is interested in creating a protocol that can provide transparent Proof of Reserve services for exchanges.
CZ narrated that while the cold wallet balances Binance published after the FTX crash is a good start for the exchange to show transparency, it is not as good as a Markle Tree-designed system. He told the audience that other exchanges could take the same step to increase transparency in the industry.
We want to help affected firms survive the FTX crash
When asked about the industry recovery funds proposed by Binance, CZ explained that the idea was from one of his co-founders and that he supported it. He revealed that the reason behind the fund is to help good crypto projects that were affected by the collapse of FTX.
Speaking more about the reason to offer this help, CZ noted that the team of these projects didn’t act wrongly to bring about the downfall of FTX and that the bearish market provides a better valuation for these projects as against the bullish season where things are exaggerated.
The Binance CEO also pointed out that about five funds and a crypto project have reached out to Binance to pattern in raising these funds to help affected projects. He added that details of the support which will be in the form of money or investment would be released with time.