Proof of Reserve service are available for embattled exchanges
Not everyone agrees with Chainlink Labs' premise that their PoR product may restore trust in crypto exchanges by fostering greater openness
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On November 10, Chainlink Labs presented their proof-of-reserve product as a solution to potential trust difficulties in the crypto exchange sector. Chainlink Labs questioned in a tweet thread, “Will crypto continue to repeat the mistakes of the traditional black-box financial industry? Or will a better system emerge?”
In response, it provided its proof-of-reserve (POR) product, which it claims is suitable "for confirming centralised exchange asset reserves, off-chain bank account balances, cross-chain collateral, real-world asset reserves, and much more."
The crypto market has been in freefall over the last two days due to a liquidity problem at the world's second-largest crypto exchange, FTX. The exchange has been unable to process withdrawals in a timely way, causing concern throughout the crypto market.
Following these ongoing issues, the crypto community has begun to discuss solutions, and one solution that has been proposed is for customers to require that every exchange they use offer proof of reserve.
Proof of reserve is a method that enables users to audit the reserves of crypto exchanges instantly. Proof of reserve has already been implemented by some exchanges, and Changpeng Zhao, CEO of Binance, has argued that all exchanges should now provide this feature.
