Proof of Reserves
Cryptographic proof that exchange actually holds user deposits — post-FTX requirement.
Proof of Reserves (PoR) is a mechanism by which crypto exchanges cryptographically prove they hold sufficient assets to cover all user deposits — without it, users must trust the exchange on its word.
Why it was created:
•FTX collapse (November 2022) — used user deposits for speculation
•Without PoR, users can't know if exchange is solvent
•Post-FTX: standard for "proving solvency"
How PoR works: 1. Merkle tree auditing: • All user balances aggregated into Merkle tree structure • Each user can verify their account is included • Third party (auditor) confirms total sum
2. Blockchain proof: • Exchange signs transaction with cold wallet addresses • Proves ownership of on-chain assets
Limitations:
•PoR snapshot at one moment — exchange can borrow for PoR day
•Doesn't prove there are no hidden liabilities
•Chainlink PoR — on-chain continuous monitoring
Who offers PoR:
•Binance — monthly PoR report
•Kraken — pioneer since 2014
•OKX — Merkle tree PoR
•Bitfinex, Bybit
Where to check:
•Nansen.ai, DefiLlama (exchange PoR tracking)
•Directly on exchange → Proof of Reserves section