The recent collapse of the FTX exchange has made transparency a crucial topic in the crypto community. For a long time, several stakeholders have been advocating for more openness in exchanges. The incident has led many exchanges to provide their Proof of Reserves. But in most cases, the exchanges only shared proof of assets without corresponding proof of liabilities. Fortunately, XeggeX is taking a different path.
The full-service cryptocurrency exchange has developed a Proof of Assets and Proof of Liabilities page using the Merkle Tree approach, aggregating all customer balances while keeping private information safe. This way, it is possible for users to verify that the exchange is holding their assets.
Although XeggeX is a small cryptocurrency exchange focusing on low-cap tokens, it prioritizes customer trust. Its Proof of Reserves page allows all registered users to verify that their assets are stored on the exchange. The page is easily navigable, and users won’t have any problems as long as they are logged in.
The exchange signs a message for each address, making it possible for users to verify the assets cryptographically. The Merkle tree standard means that users verify their assets on the blockchain, which is immutable and cannot be manipulated. This is the approach that industry stakeholders have encouraged, even though no major exchange is yet to implement it.
XeggeX has designed the page to update every six hours to ensure that the information provided is relevant and accurate. This makes it easy to track liquidity on the exchange and ensure that the exchange is solvent. Proof of Reserves and Proof of Liabilities are integral to Proof of Solvency. Users can check the code for the Merkle tree on GitHub.
The FTX implosion significantly affected customers’ confidence in centralized exchanges. The proof of reserves and liabilities is part of XeggeX efforts to ensure that customer assets are safe while it rebuilds this trust. This development distinguishes XeggeX from other centralized exchanges and sets a standard that other crypto exchanges need to follow.
The exchange already implements cold storage, two-factor authentication, encrypted wallets, live backups, etc. Also, XeggeX does not invest customers’ assets, and every deposit is safely custodied until the customer wants to withdraw it. While many other centralized exchanges have also made the same claim, XeggeX Proof of Reserves and Liabilities means users don’t have to rely on the words alone; they can verify.
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