Many crypto firms collapsed in 2022, but the collapse of FTX came as a surprise that sent shock waves throughout the crypto market, costing investors over $8 billion worth of crypto assets.
That significantly eroded user confidence, resulting in more market volatility as crypto investors continued to nurse their growing losses. The idea of Proof-of-Reserves (PoR) was born to restore trust in crypto and enhance transparency in centralized exchanges.
Bitget was among the first exchanges to launch a Proof of Reserve page and publish its Merkle tree Proof-of-Reserves. The aim is to show users that Bitget is a full-reserve exchange and that crypto assets on the platform are held in at least a 1:1 ratio.
Thus, users can enjoy a secure and transparent trading experience knowing that their assets are safeguarded, and the platform can handle concentrated withdrawals.
This post covers Bitget’s Proof of Reserves, the importance of 100% on-hand reserves, and how to use Bitget’s MerkleValidator to verify your Proof of Reverses.
What is Proof of Reserves?
Bitget Proof-of-Reserves (PoR) is the cryptographic auditing of the Exchange’s public wallets to verify and certify that the amount of crypto assets held on the Bitget exchange “exceeds, or is equal to the sum of all user’s holdings” on the platform.
The hash value of assets in each user’s account is stored in a leaf node on a Merkle tree. Thus, users can verify the existence of their funds by matching the value of assets stored in the Merkle tree leaf nodes to the published Merkle root hash.
If the verified amount of funds is greater than or equal to 100%, it shows that users’ assets are held at a 1:1 ratio. That helps to show the financial status of the Bitget exchange, gratifying users’ desire to trade, invest, and store their assets on a secure platform.
Bitget Proof Of Reserve Ratio
The latest Bitget total reserve ratio stands at 217%. The reserve ratio is calculated by dividing total platform funds by users’ funds held on the platform.
A reserve ratio greater than or equal to 100% proves that the platform has sufficient funds to guarantee a 1:1 withdrawal of all the crypto assets.
Bitget reserve pools are held in four liquid crypto coins, including BTC, ETH, USDC, and USDT, as shown in the table below:
| Reserve Coin | Platform’s Assets | User’s Assets | Reserve Ratio |
| BTC | 8456.45 BTC | 1695.27 BTC | 499% |
| ETH | 16140.91 ETH | 9356.90 ETH | 173% |
| USDC | 159188917.28 USDC | 5846564.91 USDC | 2723% |
| USDT | 447201014.85 USDT | 334885990.95 USDT | 134% |
Why Are 100%+ On-Hand Reserves Important?
If a crypto exchange cannot prove it has 100%+ on-hand reserves, it may mean that there’s a backdoor through which users’ funds are being siphoned and misappropriated.
In case of a prolonged bear market or market panic when users rush to make concentrated withdrawal requests, the platform won’t have sufficient funds to fill all withdrawal orders. That may lead to a crypto run, resulting in a black swan event and loss of users’ funds.
Therefore, having 100% on-hand reserves on Bitget means the Exchange has sufficient liquidity to pay 100% of concentrated withdrawals of users’ funds at any time.
Plus, the crypto community and regulators have scrutinized centralized exchanges a lot. Thus, Proof of reserves is a big way for exchanges like Bitget to win user and regulator confidence and foster crypto adoption.
How Does Bitget Show Proof Of Reserves?
Bitget shows proof of reserves on its PoR page using a cryptographically audited Merkle tree. Large transactions are broken and organized into a root node and leaf nodes, making it easy to verify all transactions in an efficient and timely manner and detect any tempering.
To prove its 100%+ reserves, Bitget uses a few methods, including:
- Monthly wallet snapshots: Bitget takes and publishes monthly snapshots showing wallet balances to keep on reassuring users that their funds are safe.
- Regular audits: Regular audits of Bitget reserve pools to provide up-to-date balances and the status of user funds in its reserves.
- MerkleValidator: This is a tool that users can use to perform self-audit and verify their wallet balances in a few steps.
- Education: Bitget provides helpful information and insights to help users understand how to use the Merkle tree’s leaf nodes to self-audit and authenticate the data presented by Bitget.
How To Verify Your Proof Of Reserves On Bitget
You can verify your Bitget proof of reserve by using the platform’s published monthly snapshots and the Bitget open-source verification tool called MerkleValidator.
Below is a step-by-step guide on how to do it:
Snapshots’ Verification
- Visit the Proof of Assets page: Log in to Bitget and go to the PoR page.
- Check the monthly audits: You’ll see snapshots of the platform’s monthly audits displayed on the PoR page. Click the downward-pointing arrows to expand and view the data.
- Click the Go Verify Button: Click Go Verify to verify whether your assets have been included in the Merkle tree’s hash calculation.
- Value Matching: Check to see whether the value of the Merkle tree matches the platform’s published root hash for the current month. If it does, it means your assets are included and are secured.
Using the MerkleValidator
The MerkleValidator is Bitget’s open-source tool that enables users to manually verify that their assets are included in the Merkle tree. Below is how it works:
- Click “Download”: Click “Download the data” next to the “Go Verify” button to get manually verified data for further authentication.
- Run the MerkleValidator: If the data is consistent with the Merkle tree root hash, the verification passes, which means your data has been included in the Merkle tree snapshots. Otherwise, the verification fails if the result is inconsistent with the Merkle tree root hash.
This post was sponsored by Bitget. All opinions are mine.
FAQ
Bitget proof of reserves is the guarantee that the platform will hold 100% of users’ assets in secure reserve pools. Then, publish Merkle tree proof and snapshots of the platform’s reserve wallets and reserve ratio to maintain 100% transparency with its users.
Bitgt’s proof of reserves in Bitcoin is the amount of the platform’s reserves held in Bitcoin. As of this writing, Bitget has 8456.45 BTC vs users’ 1695.27 BTC, hence a BTC reserve ratio of nearly 500%.
Disclaimer: Cryptocurrency is a volatile and speculative investment. If you decide to invest, we recommend you do your own research and only commit funds you can afford to lose. The author may own one or more of the crypto assets mentioned in this article.
