Last cycle, all eyes were on the centralised exchange Binance. Law enforcement agencies had yet to launch any attacks and its founder, Changpeng Zhao, was also still at the helm. But, even after its battles with regulators, according to The Block's data, the exchange still maintains over 40% spot trading volume dominance. However, its own chain, Binance Smart Chain, is quickly losing its dominance. 
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Crypto Exchange OKX builds user trust by taking proof of reserves to the next level

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In the crypto markets, transparency is everything, and the most important metric to demonstrate transparency is Proof of Reserves (PoR).

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

For OKX, which is the world’s second largest crypto exchange by trading volume, this goes a long way to build user trust. And we are setting ourselves apart by publishing PoR monthly. 

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

OKX 3rd Monthly Proof of Reserve

Today we released our third monthly PoR, confirming that we hold the largest fully ‘clean’ asset reserves among major exchanges at 7.5 billion at current market rates. What does this mean, and why does quality of reserves matter just as much as proof of reserves for 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 held within them, we can not only prove our financial strength but allow for real-time monitoring and verification of these funds. 

Another component of this is using something called Merkle trees to show the total liabilities an exchange has to its users. Our technical team has launched a way for users to use open source tools to verify that their liabilities are included in the total figure. When total liabilities are compared to total reserves, we can calculate the reserve ratio to prove our solvency beyond a 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 fully clean asset reserves among major exchanges according to third-party Blockchain analytics firm CryptoQuant. This is a measure that examines whether the assets held in an exchange’s reserves are made up of the exchange’s own tokens. Since we hold our reserves in Bitcoin, Ethereum, and Tether, we hold a 100% score. 

For ease of access, we let users 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 rise to the occasion to address the trust gap resulting from recent incidents in our industry. I’m proud to say that OKX will continue to lead that charge through our actions on transparency. There will be much more to come.