Vitalik Buterin and Changpeng Zhao will work on developing a new method of confirming exchange reserves

As the FTX crash highlighted the need for greater transparency in cryptocurrency exchanges, Чанпен Чжао" href="https://noworries.media/biography/chanpen-chzhao/" data-bio-id="3681">Changpeng Zhao said during an AMA session on Twitter (ask me anything — ed.) that Binance is working on implementing a new Proof-of-Reserves protocol developed by Ethereum co-founder Vitalik Buterin.

The Proof-of-Reserves protocol has been around for several years. It uses the Merkle Tree algorithm not only to combine a large amount of data into a single hash, but also to effectively verify the integrity of the data set. Changpeng Zhao has promised to ensure «full transparency» by introducing the Merkle Tree mechanism to Binance, and he has also called on other cryptocurrency exchanges to do the same.

Zhao does not rule out that the implementation of Proof-of-Reserves may take some time. Despite the fact that Binance has published the addresses of its hot and cold wallets, the world’s largest exchange by trading volume seems to be looking for alternative ways to increase the transparency of its own reserves.

«Normally, we need a third-party auditor. Unfortunately, our current auditor has been a bit busy as he is also the auditor of FTX’s reserves,» said Binance CEO during the Twitter Spaces AMA.

Thanks to the 40,000 people for listening in. Will try to do this a bit more often given the demand. https://t.co/OkCFNhLv4Y

— CZ? Binance (@cz_binance) November 14, 2022

According to Zhao, he spoke with Ethereum co-founder Vitalik Buterin, who «wants to create a new Proof-of-Reserves protocol and use Binance as a guinea pig or the first test case of how the protocol will work.» «He (Buterin) is very excited about it, and we are bringing our teams together so that people can see how it works,» Zhao said.

After the FTX crash, many other cryptocurrency exchanges promised to publicly share their proof of reserves. Among those who have already done so are Crypto.com, which released its reserves last Friday, and Huobi Global, which published an interim asset transparency report on Sunday.