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How do we restore confidence? 🤔
This is the question facing all exchange platforms since the collapse of FTX, which turned out to be a huge black box: nobody knew what the company held, in this case absolutely nothing.
The result was that more than a million customers were swindled and the losses amounted to at least... 10 billion dollars.
Since then, the platforms have been under pressure, particularly from their customers, to show that, unlike FTX, they are sound. And there's work to be done! Over the last 30 days, more than $4 billion has been withdrawn from the exchanges, according to Chainalysis. Unprecedented in the industry.
To cope with this onset of "bankrun", the last straw for an "anti-banking" ecosystem, several platforms, including Binance and Cryptocom, have drawn on the... "Proof of Reserves" system.
The aim of the Proof of Reserves is to prove that a platform actually holds its customers' funds 💸
So as to have belt and braces, the platforms have even called in an auditing firm - French firm Mazars - to certify their proof of reserves. You can never be too sure!"
And yet, confidence has not returned. Worse still, a certain mistrust seems to have set in. And for good reason: while the Proof of Reserves is interesting, it has a number of limitations, which we will come back to.
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