Emerging from the lack of trust in the traditional financial system, the cryptocurrency industry has gradually gained prominence, sparking people's thoughts and garnering widespread attention globally, growing into a trillion-dollar market. However, as an emerging industry without any reference, the cryptocurrency market brings innovation and vitality to the traditional financial market, while various unexpected black swan events cannot be ignored, making compliance, transparency, and integrity the main theme of its future development.
As a leading Web3 technology company and cryptocurrency asset platform, OKX has always prioritized the security of user assets and is committed to enhancing platform transparency to meet traditional financial audit requirements, becoming a benchmark for industry transparency.
Proof of Reserves (POR) is crucial for establishing trust between the platform and regulatory agencies, and is essential for promoting a healthy and sustainable cryptocurrency ecosystem. OKX is committed to maintaining a 1:1 reserve ratio, demonstrating its commitment to promoting the healthy growth of the platform and ensuring the accuracy of customer funds and net balance data.
On October 30th, OKX released the twelfth edition of the Proof of Reserves report, with reserve ratios for 22 listed assets all exceeding 100%, including BTC, ETH, and USDT, each with a reserve ratio of 103%, totaling a value of $12.564 billion.
The release of the twelfth edition of POR by OKX marks a full year since its initial release in 2022. During this year, OKX has consistently released POR on a monthly basis, gradually increasing the number of listed assets from 3 to 22, maintaining a reserve ratio exceeding 100% for 12 consecutive months, and continuously upgrading the POR system with milestones such as Merkle Trees, Full View Merkle Trees, and zk-STARK technology.
OKX POR One-Year Milestone Review
Proof of Reserves (POR) aims to verify whether user assets on a cryptocurrency exchange are 1:1 reserved, demonstrating its solvency and sufficient liquidity to users.
OKX has also achieved the status of an exchange that allows users to independently verify its solvency through open-source verification of Merkle Trees, wallet address ownership, and on-chain asset verification, while protecting privacy. Currently, hundreds of thousands of users have accessed the POR page and completed independent verification.
Proof of Reserves uses cryptographic methods to confirm that a cryptocurrency exchange holds specific assets on a blockchain at a specific time, enhancing the transparency of total user assets and exchange deposits without revealing sensitive information about individual account balances, making Proof of Reserves a critical component of the cryptocurrency ecosystem.
The assets held in reserve are highly liquid, widely accepted digital currencies. OKX provides Proof of Reserves for as many as 22 currencies, including BTC, ETH, USDT, USDC, XRP, DOGE, SOL, OKB, APT, DASH, DOT, ELF, EOS, ETC, FC, LINK, LTC, OKT, PEOPLE, TON, TRX, and UNI.
On the occasion of its one-year anniversary, OKX's POR release has achieved several key milestones:
• November 2022: OKX released its first Proof of Reserves, becoming one of the first mainstream exchanges to do so
• February 2023: Over 250,000 users have viewed the Proof of Reserves on OKX
• March 2023: OKX upgraded the transparency of Proof of Reserves through Merkle Tree enhancements, publicly disclosing all liability Merkle Trees while safeguarding user privacy
• April 2023: OKX introduced zk-STARK technology to Proof of Reserves, allowing users to independently verify the exchange's solvency and confirm the security of their assets
• April 2023: OKX expanded the coverage of Proof of Reserves to over 21 mainstream currencies and published over 220,000 public wallet addresses
• September 2023: Expert Nic Carter referred to OKX's Proof of Reserves as the "highest quality" among mainstream exchanges
• October 2023: OKX's Proof of Reserves celebrates its one-year anniversary with the release of the twelfth edition of the Proof of Reserves report.
OKX Chief Marketing Officer Haider Rafique stated, "Releasing hundreds of thousands of blockchain addresses, introducing trustless verification through zero-knowledge technology, and listening to user feedback for iterative upgrades represent the tremendous efforts OKX has made over the past 12 months. I would like to take this opportunity to encourage you, whether you are an OKX user or not, to re-evaluate our Proof of Reserves. OKX is setting a higher standard for trust and transparency in the cryptocurrency industry and has demonstrated its commitment through action."
OKX Enhances POR Transparency with zk-STARK Verification of User Assets
Over the past year, OKX has continuously upgraded the POR system through technologies such as Merkle Trees, Full View Merkle Trees, and zk-STARK, completing self-verification of solvency and enhancing fund transparency for CEX, thereby instilling confidence in users.
Looking back at the evolution of OKX's POR, OKX initially used Merkle Tree technology to prove the platform's assets. Merkle Trees are a data structure that efficiently and securely verifies data integrity by chunking raw data, calculating hashes, and constructing a tree structure, widely used in cryptography and data security. Through Merkle Tree technology, users can verify whether their assets are included in the Merkle Tree and the total assets, verify exchange wallet ownership, and verify whether the assets disclosed in the exchange wallet address exceed the total user assets, thereby proving the exchange's asset reserve adequacy. Public data shows that OKX has maintained a reserve ratio exceeding 100% for 12 consecutive months.
Although this technology can verify user assets in the exchange while ensuring data security and privacy, it cannot completely prove that the funds have not been misappropriated. Subsequently, to address the shortcomings of Merkle Tree technology verification, OKX upgraded to Full View Merkle Tree technology to further enhance its reserve transparency. Through this technology, users can download the Full View Merkle Tree to verify whether the exchange's publicly disclosed total user assets are correct. Additionally, by randomly splitting user data, OKX ensures user privacy while disclosing all user balances. This means that other people cannot see a user's complete asset data.
Subsequently, to continuously enhance industry transparency, in less than six months, OKX once again took the lead in upgrading POR by introducing the advanced and innovative zero-knowledge proof zk-STARK technology, raising the transparency of exchange assets to the latest industry standard. zk-STARK, or Zero-Knowledge Scalable Transparent Argument of Knowledge, is a secure method that uses zero-knowledge principles and the FRI protocol to verify data and prove the authenticity of audits. Furthermore, zk-STARK does not disclose specific amounts, values, or addresses, thereby safeguarding user privacy. The zk-STARK proof model mainly includes three constraints: the credible sum of user asset values, the absence of forged negative net assets, and the verification of asset inclusion, addressing the shortcomings of Merkle Tree technology and allowing users to independently verify the exchange's solvency.
The core function of POR is to prove that the exchange's total reserve > total liabilities (all user assets). First, OKX uses "zk-STARK" zero-knowledge proof algorithms to prove and verify all user assets held by the exchange. Then, it verifies the ownership of OKX on-chain wallet addresses and the total assets of OKX wallets. Finally, by comparing the total user assets of the exchange with the total assets in the publicly disclosed OKX on-chain wallet addresses, it verifies the exchange's asset reserve ratio.
At the same time, OKX's on-chain wallet assets are publicly transparent, gradually expanding the disclosed assets to 20+, releasing over 220,000 public wallet addresses, allowing users to verify that their funds are backed by a 1:1 real asset support, fully promoting platform fund transparency.
zk-STARK technology has received strong praise from Ethereum co-founder Vitalik. He previously stated at a forum event that zk-STARK technology will become as important as blockchain in the next 10-20 years, as a powerful privacy technology that can not only solve problems in blockchain applications but also provide better security for centralized system users. In addition, zk-STARK technology will also help blockchain achieve both scalability and privacy.
Transparency Becomes the Main Theme of the Future Cryptocurrency Industry
In recent years, the shortcomings of the traditional banking system have become apparent, leading many users to pay attention to and explore the cryptocurrency industry. Although the cryptocurrency industry cannot completely avoid black swan events and systemic risks, looking back at its development over the past few decades, despite the numerous challenges and twists and turns, it has demonstrated tremendous financial technology innovation and imagination, giving rise to various applications such as DeFi, NFT, DAO, Web3, and more.
Under the leadership of Web3 technology companies such as OKX, the industry is continuously promoting transparency and setting standards, ensuring user asset security through continuous technological innovation, and contributing to the industry's positive development.
In addition to transparency on the CEX side, OKX is continuously promoting the development of decentralized business. For example, as a one-stop Web3 gateway, the OKX Web3 wallet now supports 70+ public chains, covering five major sections: wallet, DEX, DeFi, NFT market, DApp exploration, and supporting Ordinals market, MPC and AA smart contract wallets, gas exchange, hardware wallet connection, providing users with a convenient and secure user experience.
As a leading cryptocurrency asset platform and Web3 technology company, OKX has always maintained a 1:1 reserve for user assets and releases a Proof of Reserves report every month, setting higher standards for the cryptocurrency industry and demonstrating its commitment to users.
Perhaps the current POR is not perfect, but it is necessary.
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