One of the foremost crypto price tracking websites, CoinMarketCap, recently introduced a Proof-of-Reserve feature. The feature is available for centralized crypto exchanges to improve transparency for crypto participants.
According to the announcement, the feature is available for seven centralized crypto exchanges. The exchanges include Binance, KuCoin, Bitfinex, etc.
It is worthy of note that Binance Capital Management owns CoinMarketCap. Binance is the largest digital exchange by volume, and the CEO, Changpeng Zhao, is championing the need for transparency. Furthermore, Binance CEO, formally called CZ, reiterates the need for transparency in response to the FTX debacle.
The FTX collapse and the series of shady deals have increased the call for transparency in the crypto ecosystem. On this note, industry players opine that Proof-of-Reserve should serve as the new benchmark.
There are expectations that the PoR tool or feature will aid the development of transparent and open-source protocols.
The Proof-of-Reserve promotes transparency by disclosing the number of reserve assets an exchange has to cover potential customer withdrawals.
Furthermore, the PoR tool confirms that a cryptocurrency exchange or wallet has the reserves it claims and that the data are publicly available.
Similarly, Proof-of-Reserve keeps wallets and exchanges transparent and honest because it updates the data at intervals. For instance, CoinMarketCap PoR updates the data every five minutes.
Experts say there is no better time for all exchanges and wallets to integrate the PoR feature than now. This comes in the aftermath of the FTX collapse.
Furthermore, they noted that if FTX had the Proof-of-Reserve tool, customers would have known the amount in its reserve instead of what they claimed to have.
The new Proof-of-Reserve tool on the CoinMarketCap website will provide users with up-to-date financial details on exchanges.
It is a tool that allows users to keep track of exchange reserves by displaying total assets and public wallet addresses. The new feature will collect data at intervals and display them to the users of CoinMarketCap.
Industry players and experts say the Proof-of-Reserve will improve scrutinization and transparency. It helps to check the liquidity of exchanges at any given time.
Similarly, the new feature tracks and publicizes information. This information includes the company's total assets, associated public wallet addresses, and wallet values.
Shortly after the unveiling of the feature, the CEO of Binance took to his Twitter to announce it. Changpeng Zhao tweeted that the platform has released a new exchange reserve dashboard.
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