Fun

Proof-of-funds technology seeks to replace exchanges’ reserves reports

News Feed - 2024-07-16 10:07:00

Ana Paula Pereira11 hours agoProof-of-funds technology seeks to replace exchanges’ reserves reportsData lake provider Tres is introducing a new mechanism to track exchange and custodian reserves, joining Chainlink and other solutions catering to institutional demand.371 Total views1 Total sharesListen to article 0:00NewsOwn this piece of crypto historyCollect this article as NFTJoin us on social networksProof of reserves emerged as a direct response to the need for greater transparency among companies holding digital assets on behalf of investors. Now, the mechanism is expected to be revamped as institutions seek tools for tracking and auditing onchain assets in real time.


Web3 companies are hoping to capitalize on this demand. Financial data lake Tres, for instance, is launching a proof-of-funds mechanism that reportedly offers automated snapshots delivered in real time for crypto exchanges and custodians.


“Exchanges only track wallets that exist on their co-mingled omnibus account. This is purely a balance snapshot of these specific wallets, meaning they can be potentially manipulated,” Tal Zackon, co-founder of Tres, told Cointelegraph. 


Proof of reserves is a concept developed for exchanges to prove that they hold sufficient assets to back their customers’ deposits, reducing concerns about insolvency and misuse of funds. FTX’s collapse in November 2022 may be the latest example of the need for effective asset monitoring. The collapse sparked calls for transparency and prompted exchanges to disclose how they manage user funds. 


However, the lack of standardization among companies is still one of the industry’s pain points. “We didn’t think it did the job of keeping a proper audit trail and providing real, validated trust to customers,” explained Zackon.


Binance’s proof-of-reserves page notes that although its users’ assets are fully backed, the majority of its corporate holdings are stored in wallets that are not included in its reserve calculations. Kraken, on the other hand, considers snapshots of spot balances only for selected assets, such as Bitcoin (BTC), Ether (ETH), Cardano’s ADA (ADA), Polkadot’s DOT (DOT), XRP (XRP) and some stablecoins.


“Real-time understanding of balances can be tracked manually, but seeing your full audit trail and financial history is the bigger issue,” said Zackon.


Solutions focused on onchain monitoring have been in the industry for a while. Chainlink, for example, uses oracles to conduct decentralized audits of assets and liabilities for exchanges. Glassnode also allows the tracking of exchange balances and analyzes onchain data to assess reserves.


However, the growing adoption of digital assets among traditional companies is likely to increase the demand for standardized reports using clear methodologies. Coinbase’s 2023 Institutional Investor survey revealed that 64% of current crypto investors expect their allocations to increase over the next three years.


“We believe that, in order for crypto to move forward, it must stay within the regulatory framework of existing traditional financial systems,” noted Zackon.# Blockchain# Business# Cryptocurrency Exchange# Chainlink# Web3Add reaction

News Feed

Hyperledger Challenges Quorum for Enterprise Ethereum Crown
There’s a seismic shift taking place in the enterprise blockchain space. It’s called Besu. A software client designed from scratch to connect businesses with the public ethe
Grayscale launches new decentralized AI fund
Ana Paula Pereira7 hours agoGrayscale launches new decentralized AI fundThe fund is available only for accredited investors. Its basket includes native tokens from Bittensor, Filecoin, Livepeer, Near and Render.3280 Tota
India’s Digital Currency to Take ‘Very Calibrated, Graduated’ Approach, Says RBI Deputy Governor
India"s Digital Currency to Take "Very Calibrated, Graduated" Approach, Says RBI Deputy Governor Reserve Bank of India (RBI) Deputy Governor T. Rabi Sankar has outlined the implica
Galaxy Digital to Launch 2 New Bitcoin Funds in November
Galaxy Digital Asset Management, a division of the merchant bank Galaxy Digital, is launching two bitcoin funds in November, according to a source with direct knowledge of the matter.
Report: Fanatics to Sell 60% of Candy Digital Stake Amid Struggling NFT Market
Report: Fanatics to Sell 60% of Candy Digital Stake Amid Struggling NFT Market Fanatics, the retailer specializing in licensed sports merchandise, is divesting 60% of its stake in
Jack Dorsey's Square Crypto Poaches Dev Talent from Facebook's Libra & Google
As if Facebook"s Libra doesn"t have enough trouble, they just lost a developer to a rising crypto star. Square Crypto has poached a trio of blockchain developers from across the tech industry including Lightning Labs, Fa
Biggest Movers: MATIC, QNT Move Higher on Friday, as Cryptos Rebound
Biggest Movers: MATIC, QNT Move Higher on Friday, as Cryptos Rebound Polygon was a notable gainer on Friday, as cryptocurrencies moved higher following a turbulent week of trading.
Pudgy Penguin sells 1M plushies, Donald Trump making ‘NFTs hot again:’ Nifty Newsletter
Prashant Jha5 hours agoPudgy Penguin sells 1M plushies, Donald Trump making ‘NFTs hot again:’ Nifty NewsletterPhysical versions of the popular Pudgy Penguin NFT collections are selling like hotcakes after a rocky sta
Cryptography startup Fabric raises $33M for new data privacy chip
Ana Paula Pereira2 hours agoCryptography startup Fabric raises $33M for new data privacy chipBlockchain Capital and 1kx co-led the Series A round that will back the development of a new computing chip focused on data pri
SingularityNET to invest $53M in AI infrastructure, modular supercomputer
Ana Paula Pereira11 hours agoSingularityNET to invest $53M in AI infrastructure, modular supercomputerThe investment includes modular data centers and high-performance AI infrastructure for advancements in deep neural ne
Bahamian Attorney General Insists FTX Is the Subject of an ‘Active and Ongoing Investigation’
Bahamian Attorney General Insists FTX Is the Subject of an "Active and Ongoing Investigation" The troubled and now-bankrupt crypto exchange FTX is the subject of “an active a
Next Crypto to 1,000x as Bitcoin Targets $135K by June and Trump Predicts Market Explosion
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu