Binance: Restoration of trust in crypto
Binance: Restoration of trust in crypto
In 2022, the crypto industry experienced several harmful events that significantly weakened trust in the ecosystem of the digital assets. Investors and interest groups were brought to falter from the consequences that ranged from centralized stock exchange failures to official raids.
In the course of these challenges, many industry leaders are fighting to rebuild trust in crypto. A company that takes courageous steps towards this goal is the leading crypto exchange Binance.bony is of the opinion that the improvement of trust and security of crypto assets is crucial to accelerate the general acceptance that the industry has been working on for a long time. The stock exchange strives to be leading in this aspect and to set a clear example that other CEXs can follow.
As part of this transparency efforts, Binance recently published a new strategy paper entitled "Building Trust in the Crypto Ecosystem". This fundamental paper presents guidelines that describe in detail how industry players and users can work together to improve trust, security and protection in the crypto room.
The strategy paper is also accompanied by a special side to build trust, on which everyone can see how Binance implements the new measures. The company has dedicated this page to everything that has to do with trust and transparency. In the following there are a few steps that Binance has taken to promote trust and transparency.
transparency of the funds
The first large element of the basic paper is the safe handling of customer money. Binance believes that centralized stock exchanges have to pursue a new approach to the transparency of user funds in order to restore the trust of the users.
Binance has introduced various Proof of Reserve (POR) systems that use two of the safest and most transparent cryptographic tools, Merkle Tree and Zero-Knowledge Succinct Non-Interactive Argument of Knowledge (ZK-Snarks). This POR system enables Binance users to check their reserves while sensitive user information remains private.
Binance goes one step further by opening its wallet addresses with every por snapshot. This increases the trust of the users because they can view the reserves on the blockchain. In order to promote the introduction of this POR system, Binance has published the underlying code as an open source so that other exchanges can use it and improve their transparency.
security
Binance prioritizes the security of the assets of the users and other sensitive user information that is obtained during the Know Your Customer (KYC) process. Therefore, the stock exchange uses some of the most robust encryption methods to keep them safe.
Binance stores most of the user money in cold stores. It also uses advanced security measures, including multi-signature and threshold signature schemes (TSS) to ensure the safety of the funds of the users.
The stock exchange also believes that even the safest systems can fail. As such, it has created an emergency insurance fund that protects its users in the event of a security violation. The Secure Asset Fund for Users (Safu) currently has a credit of $ 1 billion.
transparency and disclosure
Appropriate transparency and disclosure are crucial for the promotion of trust in the crypto industry. Trade platforms must enable users to check whether their assets are kept safely. Binance proposes the use of proof of reserve (POR) openings that were created with innovative transparency solutions such as ZK-Snarks and Merkel Tree-a technology that increases the efficiency and safety of the blockchain by encoding data for an easy check in a systematic order. Knowledge (ZK-Snarks) is a cryptographic evidence that can be used to prove that you have certain information without revealing the information. Since ZK-Snarks cannot be fabricated or manipulated, users can check the safety of their assets on a stock exchange at any time.
risk management
Effective risk management is crucial to preserve trust in such a volatile industry as crypto. Many companies collapsed last year due to unchecked debt positions, excessive loans and inadequate security funds.
BINANCE is of the opinion that stock exchanges must ensure that loans are appropriately secured and have to avoid debts to take out debts in order to finance expansion plans in order to prevent such incidents in the future. You also have to ensure that tokens go through strict review procedures before they are listed to protect users from investing in projects with low credibility and high risk and at the same time to clarify how the cryptom market works. It is even more important that stock exchanges have to have user protection agents as a safety network in order to protect users in cases of security gaps and extreme bear markets.
Safety of the funds of the users
Binance ensures that all user wealth values are secured 1: 1 and protected by the highest safety standards for wallpappers. The platform recently updated its self -negotiation solution of a third -party provider, Trust Wallet, to integrate additional safety functions that ensure the safe storage of the users' assets.
The stock exchange also does not use customer funds without the consent of the user for other purposes.
Evidence of the reserves
After the collapse of FTX, the third largest Cex on the market at the time, made the efforts of Binance to strengthen trust and transparency in the crypto industry. In November 2022, the stock exchange released its first POR-BUNGE FORE, which is based on Merkle Tree.
Binance updated in February 2023 its POR-BUNGE with ZK-Snarks, which is a significant improvement compared to the previous system. By disclosing his reserves, Binance enables its users to check the security of their assets at any time. Another update in March 2023 shows that Binance's poring was updated to enable the verification of user assets for a total of 24 tokens.
strict token-list requirements
Before a token is listed on the Binance platform, the projects must meet strict requirements in order to determine their suitability. As a result, users can only invest in thoroughly tested projects.
Binance Safu
Binance prioritizes the protection of the users' assets. Therefore, it has a SAFU fund (Secure Asset Fund for Users) that protects users in severe cases. Binance currently has about $ 1 billion in his safu.