BlockBeats reported on February 22 that cryptocurrency exchange MEXC has officially introduced its Merkle Tree Proof of Reserves (PoR) system, currently supporting four major assets: USDT, USDC, BTC, and ETH. According to disclosed data, as of February 10 (UTC+8), MEXC's reserve ratios for these assets all exceeded 100%, ensuring full backing for user funds.
Key Features of MEXC’s Proof of Reserves System
- Transparency: The Merkle Tree-based system allows users to independently verify asset holdings.
Multi-Asset Coverage: Initially supports four high-liquidity cryptocurrencies:
- Stablecoins (USDT, USDC)
- Major cryptocurrencies (BTC, ETH)
- Real-Time Auditing: Regular updates ensure ongoing compliance with reserve requirements.
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Why Proof of Reserves Matters for Crypto Exchanges
Following the 2022 industry events, proof of reserves has become critical for:
- User Confidence: Demonstrates solvency and reduces counterparty risk.
- Market Stability: Prevents fractional reserve practices common in traditional finance.
- Regulatory Alignment: Meets growing global demands for financial transparency.
Example reserves breakdown (hypothetical data):
| Asset | User Balances | Exchange Reserves | Reserve Ratio |
|---|---|---|---|
| USDT | $950M | $1.02B | 107% |
| BTC | 25,000 | 26,800 | 107% |
FAQs About Proof of Reserves
Q: How does Merkle Tree verification work?
A: Users can cryptographically confirm their account balance is included in the exchange’s attested holdings without exposing private data.
Q: Why don’t reserves show 100% of liabilities?
A: Ratios >100% indicate excess reserves, providing additional safety buffers.
Q: When will more assets be added?
A: Most exchanges gradually expand PoR coverage based on asset liquidity and user demand.
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Industry Trends in Reserve Reporting
Leading exchanges now compete on transparency metrics:
- Binance: Monthly Merkle Tree audits for 30+ assets
- Kraken: Real-time attestation reports
- Coinbase: Quarterly accounting audits
This shift reflects crypto's maturation toward traditional financial standards while preserving blockchain's verifiable nature.
Note: For educational purposes only. Not financial advice. Crypto trading involves risk.
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