The First Exchange to Conduct a Proof-of-Reserves Audit in Crypto Industry, Gate․io Starts Its Second Third-Party Audit
PRESS RELEASE. Gate.io has announced that it will commence another proof-of-reserves audit to provide user verifiable reserves data through a Merkle tree implementation audited by a leading third-party firm.
In 2020, as the first cryptocurrency exchange in the world to commit to providing 100% collateral, Gate.io has worked closely with Armanino LLP, a leading US audit firm, to successfully provide users with professional and credible asset verification services in an open-source, transparent, and cryptographically-verifiable Merkle tree. The asset verification model was patented by Gate.io in 2020. Performing PoR audits in this model has become one of the commonplaces for exchanges to verify asset security, and Gate.io has set a standard for the industry in asset security verification.
Proof-of-reserves audits in a nutshell
In centralized exchanges, users’ cryptocurrency balances are recorded in a centralized ledger; we’ll refer to this as “effective user reserves.” Additionally, we’ll refer to the actual amount of users’ cryptocurrency that the exchange stores on-chain as “exchange reserves.”
Take Gate.io as an example; when the exchange proves that it holds 100% of its reserves verified by a qualified audit firm, it’s proving that the total amount of exchange reserves is equal to or greater than the effective user reserves.
After completion of the audit, users will be provided with a method to verify their funds using an open-source, transparent, and cryptographically-verifiable Merkle tree. In essence, the Merkle tree is a method of encrypting data in a way that cannot be altered but can be verified. Alternatively, it allows users to reliably interact with the auditor’s findings without exposing the contents of the data itself.
As a result, Gate.io’s users can rest assured that their assets are safe and accessible at any time, and regardless of market volatility, their assets are genuinely held and available on the exchange.
Tom Yang, Executive Vice President of Gate.io, said, “Gate.io protects user funds at multiple levels, including legal, regulatory, platform security, and proof-of-reserves audits. Gate.io has invested millions of dollars in security measures and legal funds to safeguard user assets.”
Taking the lead in user trust and platform transparency
Although these audits have been around since the early years of crypto exchanges, they have not always been conducted with complete transparency and credibility. Early on, it was common for exchanges to self-audit, lack credible third-party audits, and fail to provide users with an avenue to verify their assets.
After being developed and applied by Gate.io, the third-party audit and Merkle Tree verification method has been found effective by the market. Exchanges can indeed prove that the user assets held by the platform are not less than the total amount of funds belonging to the platform users. It does not only eliminate user doubts and enhance user trust, but also promotes the healthy and stable development of the platform and the industry.
Why provide proof of reserves now?
During a time of market fluctuations and uncertainty, Gate.io is taking steps to enhance the security of its users’ assets and improve confidence in the industry and market. The exchange has a history of transparent and safe operations and intends to continue operating under these principles.
As one of the top ten cryptocurrency exchanges, Gate.io has a long history of providing secure service in the cryptocurrency industry, boasting zero asset compromises in its nine years of operation. In addition, the platform has taken steps to adhere to ethical and transparent operations, made apparent by its security history and by setting the industry example for open, transparent, and credible proof-of-reserves audits. All of this ties into the exchange’s commitment to furthering the blockchain industry, presenting as a beacon of hope and trust, and offering a top-tier platform that crypto investors can rely on.
This is a press release. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release.
Image Credits: Shutterstock, Pixabay, Wiki Commons