OKX publishes proof-of-reserves website with self-audit instructions
Rebeca Moen Nov 24, 2022 02:47
Users may audit the exchange's reserves using the proof-of-reserves website. Unless the user has taken out margin loans, these amounts should match the app's asset overview screen. Lennix Lai, OkX's director of financial markets, feels the website would increase market transparency.
OKX, a cryptocurrency exchange, has launched a proof-of-reserves website that enables customers to audit its reserves to ensure that company is solvent. This comes at a time when cryptocurrency exchanges are under increased scrutiny after the demise of FTX. OKX introduced the new website through Twitter and its blog.
When completing an audit of the exchange's reserves, users have two unique options to select from on the proof-of-reserves page.
The first allows customers to see a simplified version of the exchange's current reserves and liabilities for its main three cryptocurrencies, Bitcoin, Ether, and Tether.
The user has the option of logging in and obtaining a summary of their balances at the exchange.
Because some clients may not accept the information offered by the firm's web app, the business has also made two help file papers accessible that outline how to audit the reserves using the console on a PC."
One of the articles contained instructions for querying the OKX app's application programming interface (API) to get a Merkle tree of client balances and comparing the findings to balances that are publicly available on the blockchain.
The second participant described how people might get a Merkle leaf that corresponds to their own balances and validate that this leaf is a part of the overarching tree.
According to the news release, Lennix Lai, director of financial markets at OKX, feels that this proof-of-reserves website would assist to provide more transparency to the cryptocurrency exchange market: "Thanks to our newly implemented proof of reserves page and self-audit tool, users can now verify that their assets are adequately backed.
The cryptocurrency exchange FTX had an unanticipated lack of liquidity between November 7 and 11, resulting in the failure of the company that ran it.
In response to this episode, multiple executives from major cryptocurrency exchanges have said that proof-of-reserves pages must be established in order to provide transparency and guarantee that an event like this does not occur again.
OKX has previously said that it would provide documentation of reserves "asap."
Both KuCoin and Binance have said that they intend to publish proof of reserves over the next several weeks.
Even before the announcement of FTX, a number of other cryptocurrency exchanges, including Gate.io, Bitmex, and Kraken, have provided proof-of-reserves websites.
Image source: Shutterstock