With the addition of zk-SNARK verifications, a type of zero-knowledge proof that protects the privacy and confidentiality of sensitive user data, Binance has enhanced its proof-of-reserves (PoR) system. The enhancement was put into place, according to Vitalik Buterin, the co-founder of Ethereum, according to Binance CEO Changpeng Zhao. In November, Buterin had outlined his theories for encouraging trustless centralized exchanges using open proof-of-reserves platforms.
After the FTX collapse, customers started to demand more transparency from exchanges, and Binance initially released its PoR system in November 2022. In order to allow users to confirm their holdings, Binance at the moment used Merkle tree cryptography.
With the addition of zk-SNARK confirmations, a type of zero-knowledge proof that protects the privacy and confidentiality of critical user data, Binance has enhanced its proof-of-reserves (PoR) system. The enhancement was put into place, according to Vitalik Buterin, the co-founder of Ethereum, according to Binance CEO Changpeng Zhao. In November, Buterin had outlined his theories for encouraging trustless centralized exchanges using open proof-of-reserves platforms.
After the FTX collapse, customers started to demand more transparency from exchanges, and Binance initially released its PoR system in November 2022. In order to allow users to confirm their holdings, Binance at the moment used Merkle tree cryptography.
To demonstrate its reserves, Binance will create and publish a zk-SNARK proof for the Merkle tree's construction. Users of Binance can determine whether their account is part of the Merkle tree root by confirming the Merkle proof. Users can check the zk-SNARK evidence to confirm that there was no manipulation with the Merkle tree construction. It is impossible to obtain even a reliable fact of the Merkle tree building due to Binance's massive user base. Binance will therefore divide users into 864-user batches. To produce zk proof for a single batch of users, this would take 110 seconds. The verification of the proof takes less than one millisecond.
Binance would need to spend around $1,000 and two hours to generate proof for every account. The exchange is striving to put Buterin's recommendations into action to increase the effectiveness of the proof creation process, which should reduce costs and allow it to deliver proofs more often.
Four more cryptocurrencies have recently been added to Binance's PoR system, which presently supports 13, and more tokens will be added in the upcoming weeks. Additionally, Binance is releasing the coding for its PoR system open-source in an effort to provide its customers more clarity.
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