The company launches a “semi-automated” process to govern the reserves that back the tokens it issues. At the end of January, it was found that Binance stored token collateral with user funds in the same wallet. According to Bloomberg’s reports , the firm mistakenly stored collateral for almost half of its 94 Binance-peg tokens (B-tokens) in a single $16 billion wallet that also held customer funds.
Binance is Introducing a Semi-Automated Reserve Token Management
World’s largest crypto exchange is still improving the transparency of its reserve B-tokens following years of mismanagement. On February 23, Bloomberg informed that Binance has launched a semi-automated process in order to ensure the B-tokens are always transparently backed.
The exchange has been moving assets to dedicated wallet over the past few weeks, according to a spokesman. There is one for each network, which shows the 1:1 backing of each asset.
“This collateral has always been backing our users’ B-token assets and has always been available for withdrawal at any time. We are now simply showing it on-chain in dedicated wallets where it will remain until it may be required.” – Binance’s spokesman
It is possible that the move is a PR exercise to increase reserve transparency. Bloomberg reports that the semi-automated system might enable Binance to intervene if an incident were to impact the B-token reserves. If the worse comes to worst, the research analyst at Kaiko said they still have the ability to hit the switch.
He added: ”It isn’t an ideal fully-automated system and we’ve seen before that Binance has mismanaged the kind of minting process that goes on here.”
On February 10, Вinance implemented zero-knowledge proofs in the form of zk-SNARKs. Experts are all in agreement that it improved the company’s proof-of-reserves system. The upgraded system will enable users to check that each account’s total net balance is non-negative. It also shows that all user assets are part of Binance’s claimed total net balance. Zk-proofs are a cryptographic method of proving the validity of a statement or data without revealing the data or statement itself.
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