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Thursday, December 1, 2022

Binance Ready To Explore The ‘Safe CEX’ Idea Of Vitalik Buterin

Binance CEO Changpeng Zhao is ready to try new ways and methods after the FTX fiasco. Binance has zeroed down on Vitalik Buterin’s idea of safe CEX ideas

Whether or not we can utilize cryptographic methods to address the issue is a frequent query that arises every time a significant centralized exchange blows up.  Vitalik feels that there are two alternatives for the small-term exchanges that are custodial and non-custodial exchanges Binance is ready to incorporate their ideas so long they are transparent. 

Binance Banking On Buterin For A Safe Solution

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Exchanges have long made steps to demonstrate cryptographically that they are not defrauding their subscribers. The largest Bitcoin exchange at the time, MtGox, demonstrated that they had money by sending a transaction that transferred 424242 BTC to a known address in 2011. The opposite side of the issue—proving the whole amount of clients’ deposits—began to be discussed in 2013. You can establish the exchange’s solvency by demonstrating that it has the resources necessary to reimburse each of its depositors if you can demonstrate that the sum of customers’ deposits equals X (the “proof of liabilities”) and that you are the owner of the private keys to X coins (the “proof of assets”).

Binance says according to Buterin simply publishing a list of (username, balance) pairings, deposits can be proven in the simplest possible way. Every user has the option to verify that their balance is listed, and anyone can check the entire list to verify that every balance is positive and (ii) the overall amount is what was reported. Binance feels, this compromises privacy, so Buterin may alter the plan slightly: publish a list of (hash(username, salt), balance) pairs and send the salt values of each user confidentially. Our second innovation, the Merkle tree method, was motivated by the desire to protect anonymity.

Irrespective  of what Binance is looking for a long-term full proof solution

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