Crypto Exchange OKX Boosts User Trust by Taking Proof of Reserves to the Next Level

Thursday, January 19, 2023 8:12 a.m.


Lennix Lai

Managing Director of Global Institutional at OKX

In crypto markets, transparency is paramount, and the most important metric to demonstrate transparency is proof of reserves (PoR).

OKX is the industry leader in transparency through our efforts to prove our holdings using blockchain technology. Proof of reserves provides assurance that exchanges are able to match client holdings with an equal or greater amount of reserves. In our mission to build the future of Web3, using technology to show transparency is consistent with our deepest principles.

For OKX, which is the second largest crypto exchange in the world by trading volume, this goes a long way in boosting user confidence. And we stand out by publishing monthly PoR.

However, not all of these disclosures are created equal, and the quality of the reserves held by crypto exchanges is under scrutiny.

OKX 3rd Proof of Monthly Reserve

Today we released our third monthly PoR, confirming that we hold the largest pools of fully ‘clean’ assets among major exchanges at 7.5 billion at current market rates. What does this mean, and why is reserve quality as important as reserve proof to the crypto industry?

For an exchange, PoR offers a chance for exchanges to leverage blockchain technology to build trust with users. By disclosing the crypto addresses we own and allowing third parties to examine the cryptocurrencies they contain, we can not only prove our financial strength, but also enable real-time monitoring and verification of these funds.

Another element is using something called Merkle trees to show an exchange’s total liability to its users. Our technical team has launched a way for users to use open source tools to verify that their responsibilities are included in the total figure. When the total liabilities are compared to the total reserves, we can calculate the reserve ratio to prove our solvency beyond doubt. This is a great example of how blockchain technology can be used to meet a critical need in the crypto market.

But for OKX, proving solvency is not enough. We are also proud to have the largest pools of fully owned assets among major exchanges according to a third-party Blockchain analytics firm. CryptoQuant. This is a measure that examines whether the assets held in an exchange’s reserves consist of the exchange’s own tokens. Since we hold our reserves in Bitcoin, Ethereum and Tether, we hold a score of 100%.

For ease of access, we allow users to view the exchange’s PoRs on our website containing reserve ratios for new and historical data. Users can self-verify assets with trustless tools on the OKX website.

Crypto must seize the opportunity to bridge the trust gap resulting from recent incidents in our industry. I am proud to say that OKX will continue to lead this charge through our transparency actions. There will be plenty more to come.

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