👉🏻 After the bankruptcy of FTX in November 2022, various exchanges launched their own reserve proof systems. Today, let's take a look at the current state of Binance's "fund reserves" two years later.
💡 Proof of Reserves (PoR):
In traditional finance, institutions often hire third-party agencies to audit their financial status and prove that the user assets they hold have 1:1 funding support, where there is still a possibility of fraud.
Binance uses another effective and transparent verification method:
"Merkle Tree Proof" is a cryptographic technique that consolidates a large amount of data into a single hash and verifies the integrity of the data set.
At the beginning of each month, Binance releases a PoR proof based on Merkle Trees in the form of snapshots, and provides users with a zk-SNARK protocol based on zero-knowledge proofs to support users in self-verifying the authenticity of their funds data.
🧭 Reserve status
The user assets held by Binance account for over 20% of all CEX stock, with all managed crypto assets valued at over $120 billion.
The funding reserves of mainstream currencies all exceed 100% to ensure smooth redemption of user funds.
😇 SAFU Asset Safety Fund
Don't forget, in addition to solid funding reserve proof, Binance also has a User Fund Safety Fund (SAFU).
"Funds Are Safe" is a catchphrase that CZ often uses to assure users, which later became a meme through online dissemination, and it is also the origin of the name of this fund, "SAFU."
The SAFU fund wallet has long-term reserves of $1 billion $USDC to respond to extreme security risk challenges.
(By the way, $1 billion is approximately equal to 13,000 BTC, many exchanges do not have this much BTC assets under custody.)
🔶 Summary
After all this, I just want to say that Binance's reserves are plentiful, and user assets are very safe. Everyone can use it with confidence~