Cryptocurrency exchange Binance recently released its 9th reserve certificate (snapshot time is August 1). A total of 30 currencies were announced, and the reserve ratios exceeded 100%. Among them, the most concerning 4 The reserve rates of BTC, ETH, BNB, and USDT are 105.61%, 102.71%, 113.85%, and 117.99% respectively.

User assets slightly withdrawn from Binance exchange

Compared with the 8th reserve proof announced by Binance (snapshot time was July 1), users' BTC assets decreased by 0.6%, a decrease of 3,835 BTC; users' ETH assets decreased by 2.3%, a decrease of 95,000 ETH; users' BNB assets decreased by 1.4%, a decrease of 423,000 BNB; users' USDT assets decreased by 1.2%, a decrease of 197 million USDT.

Despite this, DefiLlama data shows that the total assets of the entire Binance exchange have not fluctuated much. From the beginning of 2023 to the time of writing, it has fluctuated between approximately US$55 billion and US$70 billion. The current total assets of Binance are approximately US$62.7 billion.

However, it is worth mentioning that according to a post by on-chain analyst Aleksandar Djakovic, Binance spent approximately US$3.5 billion to purchase approximately 100,000 Bitcoins and 550,000 Ethereums between 3/1 and 5/1. . The same amount as the USDC surplus they have, all of which can be seen in the Proof of Reserves.

However, there is a question: did Binance use its own money, or did users have a need to buy? According to the data released by Binance, on March 1, the exchange users held only more than 60 million USDC, while Binance held 3.48 billion USDC, so it can be judged that Binance took the initiative.

Then in May, customers began to sell crypto assets, and Binance once again exchanged BTC, ETH, and USDT for USDC, and then returned to normal reserves.

As for the reason for doing so? Experts believe that it is related to the collapse of Silicon Valley Bank and Signature Bank at the time, which affected the stablecoin USDC. Since Binance lacks a large-scale withdrawal channel and in order to avoid being affected by the depegging, a large amount of USDC was exchanged for BTC and ETFs.

What is Proof of Reserve?

With the bankruptcy of cryptocurrency exchange FTX last year, global exchanges began to implement Proof of Reserve to gain user confidence. Exchanges must prove that they have assets covering all users at a 1:1 ratio and have reserves. This means that when a user deposits one BTC, the exchange's reserves will increase by at least one BTC to ensure that the user's funds are supported.

According to Binance’s official website, in order to prove that it owns assets that cover all users at a 1:1 ratio, Binance built a Merkle tree to allow users and third-party institutions to verify within the platform. Binance further stated:

Our goal is for each user to be able to use their own generated Merkle hash to verify their asset holdings.

This way people can confirm that their funds are held 1:1 and can be verified by a third-party auditor.