When compared to the $40B that was recorded last year, this accomplishment is substantial.
The exchange has stressed the importance of its proof-of-reserves mechanism.
Crypto exchange Binance reported on March 18 that the value of its assets under custody had surpassed $100 billion. When compared to the $40 billion that was recorded last year, this accomplishment is substantial.
Reasons cited by Binance for the growth include the exchange’s dedication to maintaining a 1:1:1 ratio between user cash and additional assets, as well as a meteoric rise in the value of digital assets. A crucial component of this guarantee is Binance’s proof-of-reserves (POR) mechanism, which enables the verification of 100% collateralization ratios in all prominent cryptocurrencies and altcoins.
Binance is certainly not going anywhere, even if the exchange and its co-founder Changpeng Zhao (CZ) are the targets of the U.S. Department of Justice proceedings.
Proof-of-Reserves Mechanism
Even more so, the exchange has stressed the importance of its proof-of-reserves mechanism in demonstrating its capacity to meet withdrawal requests from customers. After FTX’s bankruptcy in November 2022, this approach was introduced. It was revised in February 2023 to make audits more efficient and transparent.
As a key component of its transparency measures, the exchange’s proof-of-reserves demonstrates its financial health and safeguards client funds. Though there are benefits to POR, analysts note that it only shows the relevant aspects of an exchange’s financial situation and doesn’t include information on its liabilities or net equity. However, confidence in the venue’s financial health is bolstered by Binance CEO Richard Teng’s statement that the exchange has a “debt-free” capital structure.
Members of the panel also voiced concerns over the reliability of blockchain market research companies’ user funds calculators. It was made clear that these numbers are useful, but they may not fully represent the total quantity of user funds on Binance.