What is Proof Of Reserves?

November 19, 2022

A Proof-of-reserves is an independent third-party audit that provide transparency and proof that a custodian owns the assets it claims to hold on behalf of its clients.

A PoR method enables users to instantly audit the reserves of crypto exchanges.

This auditor takes an anonymized snapshot of all balances held and aggregates them into a Merkle tree — a privacy-friendly data structure that encapsulates all client balances.

In 2021 Ledn, a digital asset lending platform, became the first lender to undergo a PoR attestation with a certified public accountant.

Following the epic meltdown of FTX, some within the industry are calling for PoRs to provide greater transparency—but it has its limitations.

Crypto.com released its Proof-of-Reserves last week.

Binance is planning on working on a proof-of-reserves protocol invented by Vitalik Buterin, creator of Ethereum.