OKX POR One-Year Anniversary: Setting Multiple Milestones and Leading a New Standard of Transparency

Author: OKX

The cryptocurrency industry, born out of a lack of trust in the traditional financial system, has gradually emerged and sparked reflection and widespread global attention, growing into a trillion-dollar market. However, as an emerging industry without any references, the crypto market brings innovation and vitality to traditional financial markets while also facing various unexpected black swan events that cannot be ignored. Compliance and transparency are becoming the main themes of its future development.

As a global leading cryptocurrency exchange and Web3 technology company, OKX boasts top-notch security and liquidity, prioritizing the safety of user assets and striving to enhance platform transparency to meet traditional financial audit requirements, becoming a benchmark for industry transparency. Among them, OKX's continuously iterated Proof of Reserves (hereinafter referred to as "POR") technology and methods have been rated by blockchain expert Nic Carter as representing the highest quality of POR among mainstream exchanges.

Proof of Reserves is key to establishing trust between the platform and regulators, and is crucial for promoting a healthy and sustainable crypto ecosystem. OKX is committed to maintaining a 1:1 reserve ratio, demonstrating its commitment to fostering the healthy growth of the platform and ensuring the accuracy of customer funds and net balance data.

On October 30, OKX released its twelfth Proof of Reserves report, showing that the reserve ratios of 22 publicly listed cryptocurrencies exceeded 100%, with BTC, ETH, and USDT all having a reserve ratio of 103%, totaling a value of $12.564 billion.

The release of OKX's twelfth POR marks a full year since its first POR was published at the end of 2022. Over the past year, OKX has consistently released POR monthly, gradually increasing the number of publicly listed cryptocurrencies from 3 to 22, maintaining a reserve ratio above 100% for 12 consecutive months, and continuously upgrading the POR system through technologies such as Merkle Trees, Comprehensive Merkle Trees, and zk-STARK, achieving multiple milestones.

OKX POR One-Year Milestone Event Review

The Proof of Reserves (POR) aims to verify whether user assets are held in a 1:1 reserve by the cryptocurrency exchange, demonstrating its solvency and sufficient liquidity to users.

OKX is currently the only exchange in the industry that has simultaneously achieved open-source verification through Merkle Trees, open-source verification of wallet address ownership, and open-source verification of on-chain assets, allowing users to independently verify their solvency at any time while protecting privacy. Currently, hundreds of thousands of users have participated in accessing the POR page and completed self-verification.

Proof of Reserves confirms the specific amount of assets held by a cryptocurrency exchange on a particular blockchain at a specific time through cryptographic proof methods, enhancing the transparency of total user assets and total deposits of the exchange, while not disclosing any sensitive information regarding personal account balances, making Proof of Reserves a key component of the crypto ecosystem.

The assets used for reserves are highly liquid and widely accepted cryptocurrencies. OKX provides Proof of Reserves for up to 22 cryptocurrencies, including BTC, ETH, USDT, USDC, XRP, DOGE, SOL, OKB, APT, DASH, DOT, ELF, EOS, ETC, FC, LINK, LTC, OKT, PEOPLE, TON, TRX, and UNI.

On this one-year anniversary, the OKX POR has achieved multiple key milestones:

• In November 2022, OKX released its first Proof of Reserves, becoming one of the first mainstream exchanges to publish a Proof of Reserves.
• In February 2023, the number of users viewing the Proof of Reserves on OKX exceeded 250,000.
• In March 2023, OKX upgraded the transparency of Proof of Reserves through Merkle Trees, publicly disclosing all liabilities in the Merkle Tree while ensuring user privacy.
• In April 2023, OKX introduced zk-STARK technology into Proof of Reserves, allowing users to independently verify the exchange's solvency and confirm that their assets are fully protected.
• In April 2023, OKX expanded the coverage of Proof of Reserves assets to over 21 mainstream cryptocurrencies, releasing more than 220,000 public wallet addresses.
• In September 2023, the industry-leading Proof of Reserves was described by expert Nic Carter as having the "highest quality" among mainstream exchanges.
• In October 2023, the one-year anniversary of OKX's Proof of Reserves was celebrated with the release of the twelfth Proof of Reserves report, continuing to lead the industry.

OKX Chief Marketing Officer Haider Rafique stated, "The release of hundreds of thousands of blockchain addresses, the introduction of zero-knowledge technology for trustless verification, and the listening to user feedback for upgrades and iterations represent the tremendous efforts OKX has made over the past 12 months. I want to take this opportunity to encourage you, whether you are an OKX user or not, to revisit our Proof of Reserves; OKX is setting the standard for trust and transparency in the crypto industry."

OKX Enhances POR Transparency Through zk-STARK Verification of User Assets

Continuous innovation is the core driving force behind OKX's journey, which is also reflected in OKX POR.

Over the past year, OKX has continuously upgraded the POR system through technologies such as Merkle Trees, Comprehensive Merkle Trees, and zk-STARK, completing solvency self-verification while promoting CEX to enhance fund transparency, thereby instilling confidence in users.

Looking back at the upgrade history of OKX POR, OKX initially proved platform assets by introducing Merkle Tree technology. A Merkle Tree is a data structure that efficiently and securely verifies data integrity by chunking raw data, performing hash calculations, and constructing a tree structure, and it is now widely used in cryptography, data security, and many other fields.

Through Merkle Tree technology, the verification process generally involves three core steps: verifying whether the user's assets are included in the Merkle Tree and the total assets, verifying the ownership of the exchange's wallet, and verifying whether the assets in the publicly disclosed wallet addresses are greater than or equal to the user's total assets, thus proving that the exchange's asset reserves are sufficient. According to publicly available data, OKX's reserve ratio has exceeded 100% for 12 consecutive months.

Although this technology can verify whether user assets are recorded in the exchange while ensuring user data security and privacy, it cannot completely prove that the funds have not been misappropriated. Subsequently, to address the shortcomings of Merkle Tree technology, OKX upgraded to Comprehensive Merkle Tree technology, further enhancing its reserve transparency. Through this technology, users can download the Comprehensive Merkle Tree to verify whether the total assets of all users disclosed by the exchange are correct.

Additionally, by randomly splitting user data, it ensures user privacy while disclosing all user balances, meaning that individual users' complete asset data will not be visible to others.

After that, to continuously promote the improvement of industry transparency, within less than six months, OKX once again took the lead in upgrading POR by introducing the advanced and innovative zero-knowledge proof zk-STARK technology, raising the transparency of exchange assets to the latest industry level. zk-STARK, or Zero-Knowledge Scalable Transparent Argument of Knowledge, is a secure method for verifying data and proving the authenticity of audits through zero-knowledge principles and the FRI protocol. Furthermore, zk-STARK does not disclose specific amounts, values, or addresses, thereby protecting user privacy.

The zk-STARK proof model mainly imposes three constraints on user-side statistics: the credibility of the total value of user assets, ensuring that no user has fabricated negative net assets, and allowing users to verify whether their assets are included, thus compensating for the shortcomings of Merkle Tree technology and allowing users to independently verify the exchange's solvency.

The core function of POR is to prove that the total reserves of the exchange are greater than the total liabilities (all user assets). OKX first used the "zk-STARK" zero-knowledge proof algorithm to prove and verify all user assets held by the exchange. Then, it verifies the ownership of OKX's on-chain wallet addresses and the total assets of OKX's wallets. Finally, by comparing the total assets of exchange users with the total assets in the publicly disclosed OKX on-chain wallet addresses, it verifies the asset reserve ratio of the OKX platform.

At the same time, OKX's on-chain wallet assets are publicly transparent, gradually expanding the publicly disclosed assets to over 20, releasing more than 220,000 public wallet addresses, allowing users to verify at any time that their funds have 1:1 real asset support, fully promoting the transparency of platform funds.

The zk-STARK technology has received strong praise from Ethereum founder Vitalik. He previously stated during a forum event that zk-STARK technology will become as important as blockchain in the next 10-20 years. As a powerful privacy technology, it can not only solve problems in blockchain applications but also provide better security for users of centralized systems. Additionally, zk-STARK technology will help balance scalability and privacy in blockchain.

Transparency Becomes the Main Theme of the Future Crypto Industry

In recent years, the collapse of traditional banks has exposed the flaws in the financial system, leading many users to pay attention to and try the crypto industry. Although the crypto industry cannot completely avoid black swan events and systemic risks, looking back at its short development history of just a few decades, despite the thorns and twists along the way, it has demonstrated immense financial technology innovation and imagination, giving rise to numerous applications such as DeFi, NFT, DAO, and Web3.

Moreover, under the leadership of global leading Web3 technology companies like OKX, the industry is continuously promoting the enhancement of transparency and the establishment of standards, ensuring the safety of user assets while facilitating positive development in the industry through continuous technological innovation.

In addition to transparency in the CEX sector, OKX is also continuously promoting the development of decentralized businesses. For example, as an industry-leading one-stop Web3 entry point, the OKX Web3 wallet now supports over 70 public chains, covering five major areas: wallets, DEX, DeFi, NFT markets, and DApp exploration, while also supporting Ordinals markets, MPC and AA smart contract wallets, gas exchange, and hardware wallet connections, providing users with a convenient and secure experience.

As a global leading cryptocurrency exchange and Web3 technology company, OKX has always maintained a 1:1 reserve for user assets and publishes monthly Proof of Reserves reports, setting a higher standard for the crypto industry.

Looking back at 2023, OKX is the first exchange in the industry to complete the one-year milestone of POR, demonstrating its commitment to users through action.

Perhaps the current POR is not perfect, but it is necessary.