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Crypto Derivatives Exchange Deribit Releases New Client Asset Verification Tool

Deribit, the popular cryptocurrency derivatives exchange, announced today that it has launched a new “Proof of Reserves” tool for clients using the trading platform. Customers are now provided with the ability to verify that their assets are included in Deribit’s total reserves.

working principle

    Deribit provides all addresses of all on-chain assets and provides a daily file containing all liabilities (all client balances) in a hashed form. Note that assets held by third-party custodians are not under Deribit’s direct control and therefore cannot be included in the report. Therefore, the data files that are fully accessible to all stakeholders only contain accounts holding assets on Deribit.

      Clients get a key that allows them to find their balances throughout the file and can be sure that their assets are included in Deribit’s chain in the balance.

        All codes used to create Deribit’s modified Merkle tree are available, so customers can verify the accuracy of front-end data. In order to prevent the same random number from being assigned to different users with comparable asset levels and reduce the size of liabilities, Deribit provides each account with a unique “Proof ID”. Customers can convert the Proof ID to an identifier found in the daily snapshot file and displayed in the Verification section of the Proof of Reserve page.

          The sum of the assets contained in the asset file should always be less than the sum of the assets available on the chain. The difference is the Deribit reserve ratio, which includes insurance funds and Deribit revenue. Deribit has a proof of reserve if the total on-chain balance is higher than the asset file balance (visible in the frontend and in the file itself).
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