In November 2022, Binance’s Proof of Reserves (PoR) system using Merkle tree cryptography was released to enable users to verify their holdings. Binance’s solution is now even better with the reported implementation of zk-SNARKs (a type of zero-knowledge proof).
Making the announcement, Binance tweeted:
Our team made some upgrades to the #Binance Proof of Reserves (PoR) verification system this week.
— Binance (@binance) February 10, 2023
🧵 Here’s a thread to summarise the updates. pic.twitter.com/TGFg4Q5WMu
Tweet-quoting Binance, CEO Changpeng Zhao stated transparency improvement is an ongoing effort. He tweeted:
Improving transparency is an on-going effort. This new system PoR with zk-SNARK is @VitalikButerin's idea (or suggestion). We implemented it now. Keep building. https://t.co/ijVVeF7KQl
— CZ 🔶 BNB (@cz_binance) February 10, 2023
Privately and securely, users can know that every account’s total net balance, and if or not it is non-negative. They can also know if all user assets are included in the “claimed total net balance of user assets” of Binance.
In every instance of proving their reserves, Binance states it would publish:
1. The Merkle proof: the hashes for each user (for Alice, represented by blue nodes in the above picture).
2. zk-SNARK proofs and public input (a hash of the list of total net balances of each asset and the Merkle root) of the circuit for all users.
Binance’s new proof-of-reserves solution combines zk-SNARKs and Merkle tree information. It gives users a fresh avenue to verify Binance’s reserves. Still, Binance’s upgraded proof-of-reserves solution’s fundamental building block is a Merkle tree.
In a twitter thread, Binance shared updates to its Proof of Reserves verification system. Binance states,
Breaking the security of modern zero-knowledge proof systems is not feasible within today’s computational power.
Binance states the concerned upgrade has “added four new tokens to the PoR system.” This takes the total number of supported tokens to 13.
Addition of more tokens to Binance’s PoR is underway, per Binance. Code for Binance’s PoR system is reportedly being made open-source as Binance intends to offer high-transparency to its users.
Binance wants its industry peers and the community to benefit from innovative technology. Investment in technology aimed to increase the Verification function’s reliability, security, and privacy is reportedly on Binance’s roadmap. Binance encourages its community to offer feedback to enable bettering their system since this is their zk-SNARK’s first ever version.
