Cryptocurrency exchanges are not in the best shape since the market crashed. Many crypto lenders have filed for Chapter 11 bankruptcy, such as Voyager or Celsius and now also Sam Bankman-Fried's exchange, FTX. In short, the lack of solvency of these companies has made withdrawals impossible and frozen billions in assets, which will be sold at a loss to carry out a restructuring plan.
Trust is no longer what it used to be and users are learning from the mistakes of the crypto world. One of the premises of the cryptographic environment is not to trust third parties, but to verify using the blockchain. That is why CoinmarketCap, the leading project tracking platform, publishes a tool to track exchange reserves, a symbol of transparency and credibility. This instrument responds to the need to implement the Proof of Reserve, a measure that allows the guarantees to be verified to find out how solvency a cryptocurrency exchange has.
Binance was the first to take an interest in this measure, or so it seems. In an exclusive interview for Mundo Crypto News, Kucoin assures that when Chanpeng Zhao's exchange published his interest in this model, they had already been hard at work preparing this information. Although some companies have taken more steps than others, the truth is that only 7 exchanges out of 245 registered in CoinmarketCap have published their reserves: Binance, KuCoin, Bitfinex, Bybit, OKX, Huobi, and Crypto.Com.
Curiously, neither Coinbase nor Kraken have published anything about their reserves, which is worrying as they are ranked in the top 5 exchanges by trading volume. By analyzing the published reserves, we can see how Binance has $68,315,231,296 in reserves, that is, four times its daily transaction volume. CZ's exchange ranks as the largest in the number of reserves and trading volume, although other exchanges have the same collateral ratio.
KuCoin has 22 times less volume than Binance, albeit with the same proportion in its reserve, showing that its commitment is just as strong. This exchange has $2,508,074,613.79 in reserves, four times its daily trading volume. In both exchanges, Bitcoin the percentage of bitcoin sits in third place with 13% in Binance and 11.29% in KuCoin.
One thing to note is that the CZ's exchange has a large exposure to its native currency, i.e. 41.75% between BUSD and BNB. FTX placed much of its trust and reserves in FTT, which hastened its demise due to the collapse of its native currency, a practice that Binance criticized and now carries out itself.
For its part, KuCoin is also exposed, but to a lesser extent, 57.08% of the collateral is in USDT, KCS, BTC, ETH, and USDC, although it only has 18% in its own currency. Bitfinex has the highest percentage of reserves, 48 times its daily trading volume, and also the highest exposure to Bitcoin, 41.69% of collateral. The rest of the exchanges with published reserves only have 2 times their daily trading volume.
Do you think that the exchanges are increasing their credibility or, on the contrary, are generating distrust?