Reserve reports have been growing more popular as of late, as companies compete with one another to demonstrate how transparent they are, and OKX has now published its third report detailing their holdings.
FTX forces more exchanges to publish reserve reports
The FTX collapse has forced a variety of different exchanges to begin to publish reserve reports in order to demonstrate how transparent they are. Although reserve reports are nothing new for cryptocurrency exchanges, there has been a renewed interest in them following the aforementioned debacle – many in the space have decided to leave centralised exchanges altogether, and have withdrawn their assets to self custody.
Binance, KuCoin, Kraken, and a series of other exchanges have all been falling over themselves to demonstrate that they have enough funds on their platform and that their users shouldn’t worry about their assets being backed 1:1.
This has helped to assuage a lot of the concerns about the solvency of major exchanges, but has come with some limitations. Notably, reserve reports do not show what liabilities an exchange has, meaning that they can’t be certain their assets are fully backed; reserve reports show assets held, not the total number of claims on them.
In light of the collapse of FTX, the main thing that investors wish to see is that the exchanges they are using are not taking out debt by collateralising their own tokens, since the disproportionate effect that exchanges have over these tokens is problematic.
OKX publishes 3rd proof of reserves report
OKX has now published their third proof of reserves report, and will continue to publish such reports moving forward in an effort to be as transparent as possible with their community.
Don’t trust, verify → OKX Proof of Reserves (PoR) is LIVE.
To set a new standard of transparency, risk management and user protection, we’re launching our first PoR.
You can now verify your assets are backed 1:1 on #OKX ⤵️
— OKX (@okx) November 23, 2022
The OKX reserve report excluded holdings of their native token and demonstrates that they hold over $7.2 billion in assets on the platform.
This has been a huge boost for the exchange, and investors are reassured by the fact that this means they almost certainly do not have any liabilities against their native token.
Decentralised exchanges continue to steal market share
Decentralised exchanges have some huge advantages over their centralised counterparts thanks to their transparency, and the fact that anyone can access them in a completely permissionless way.
Binance CEO Changpeng Zhao has reiterated that he believes this trend is likely to continue in the coming years, as privacy technology means that decentralised exchanges become a more viable means of trading.
Currently, centralised exchanges are overwhelmingly dominant, and there are many reasons for this. The most significant reasonf for this is that they are easier to use, and come with fiat on ramps.
However, liquidity begets liquidity, and exchanges such as Uniswap and Sushiswap have continued to gain traction over the past few years. The fact that they don’t require anyone to surrender custody of their assets to use them is a huge advantage over their centralised competitors.
Wall Street Memes (WSM) - Newest Meme Coin
- Community of 1 Million Followers
- Experienced NFT Project Founders
- Listed On OKX
- Staking Rewards