Binance is upgrade Its Proof of Reserve (PoR) system with zk-SNARK verification is a form of zero-knowledge proof that protects the privacy and security of users’ sensitive information.
Binance CEO Changpeng Zhao Said This improvement was implemented following a suggestion by Ethereum co-founder Vitalik Buterin. Buterin announced his idea of facilitating a trustless centralized exchange through a transparent proof-of-preparation system in November.
Binance first unveiled its PoR system in November 2022. This is because users have started demanding more transparency from exchanges in the aftermath of the FTX collapse. At the time, Binance was using Merkle-His-Tree ciphers to allow users to verify their possessions.
However, this system had two major drawbacks. First, the leaf nodes of the Merkle tree represented hashes of the user’s possessions to protect privacy.So the Merkle root is Reflects the sum of balance information for leaf nodes.
Second, a malicious entity could add a negative balance under a bogus account somewhere in the tree to make the required reserve size appear smaller.
Binance claims zk-SNARK solves these challenges. A zero-knowledge verification system can confirm that every leaf node in the Merkle tree contributes to the total user balance of each cryptocurrency claimed by Binance. Also, ensure that the tree does not contain users with negative balances.
Binance will generate and publish zk-SNARK proofs for Merkle tree construction to prove its reserves. By verifying the Merkle Proof, Binance users can confirm whether their balance is included in the root of the Merkle Tree. Users can verify the zk-SNARK proof to ensure that the Merkle tree construction has not been tampered with.
With millions of users on Binance, it is not possible to obtain a single proof of Merkle tree structure. Therefore, Binance divides users into batches of 864 each. It takes 110 seconds to generate a zk proof for her one batch of users. Proofs can be verified in less than 1 ms.
It takes two hours for Binance to generate proof for all accounts at a cost of around $1,000. The exchange is working to implement Buterin’s proposed solution to improve the efficiency of the proof generation process. This reduces costs and allows you to provide proofs more frequently.
Binance’s PoR system currently supports 13 cryptocurrencies, with four more recently added, and more to come in the coming weeks.
Binance has also open sourced the PoR system code to provide transparency to users.
