Deribit crypto derivatives exchange releases new client verification function
Deribit, a popular cryptocurrency derivatives exchange, today announced that it has launched a new “Proof of Reserves” tool for clients who use the trading platform. Clients now have the ability to verify their assets in order to be included in Deribit’s overall reserves. How it WorksDeribit provides all addresses of all on-chain assets, and it generates a daily file with all liabilities (all client accounts) in a hashed manner. Because assets held by third-party custodians are not under Deribit’s control, they cannot be included in this report. The data file is only accessible to Deribit accounts.
Clients receive a key that allows them to locate their balances in the overall files and can ensure their assets are covered by Deribit’s On-Chain Balance.
Clients can access all code used to create Deribit’s modified Merkle Tree so they can verify the accuracy. Deribit assigns each account a unique ProofID to prevent the same nonces being assigned to different users with similar asset levels. This reduces the liability size. Clients can convert the Proof ID to the identifiers shown in the Proof of Reserves page’s verification section.
The total assets in the asset file should be lower than the total assets on-chain. The Deribit reserve ratio (which includes Deribit revenues and insurance funds) is the difference. If the total on-chain balance exceeds the asset file balance (visible at the front end) then Deribit has proof of reserves.