OKX issues second proof-of-reserve report, assures clients of asset safety

OKX has released its second Proof-of-Reserve (POR) report. The exchange said it will publish the reserve report on the 22nd of every month for transparency reasons.

okx announced That they included a self-audit feature for users to verify the security of their assets. The tool uses a Merkle tree method by taking a snapshot of all accounts and assigning each a unique ID. Each user’s assets are stored in the balance tree as a “Merkle leaf”. All “Merkle Leafs” together form a “Merkle Root”, which represents the holdings of all users on the platform.

authenticity of the report

Merkle trees can be a useful tool for providing proof of store for cryptocurrency exchanges. However, it is important to note that the authenticity of a proof-of-store based on a Merkle tree depends on the authenticity of the underlying data and the security of the hash function that is used to generate the hashes in the tree. If any of this is questionable, the proof of store may not be reliable.

In addition to relying on Merkle trees, there are other steps exchanges can take to provide transparency and demonstrate that they have the funds to cover customer deposits and fulfill withdrawal requests. For example, exchanges may allow outside auditors to review their books and verify that they have the necessary funds. They may also implement other security measures, such as cold storage and multi-signature protocols, to protect customer funds.

OKX is on track with some of these additional measures. Although they haven’t officially used any third-party verification platforms, customers can use resources such as Nanase Or “verify addressCreated by OKEx to verify the possession of funds at their address. OKX has also stated that they hold 95% of all funds on their offline storage system.

While the proof of reserve report issued by OKX is a welcome development, the US Securities and Exchange Commission (SEC) warned Crypto market investors should not blindly believe the PoR reports issued by the exchanges as they may not always be accurate.

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