- Exchanges are posting their proof-of-reserves following the FTX controversy. They are keen to show they will not meet a similar illiquid fate
- Major exchanges hold trillions in Shiba Inu tokens because they have a 1:1 ratio with customer funds
- Vitalik Buterin, shocked at significant Shiba Inu, holdings says ‘I do not understand the psychology of someone who holds $10 million in Shiba Inu right now’
Exchanges have been facing public pressure to post their proof-of-reserves after the FTX insolvency crisis.
Leading exchange Binance holds $SHIB worth over $816 million in their reserves, totaling just 1% of their held funds.
In contrast, Crypto.com’s CEO Kris Marszalek has taken to Twitter to declare reserve status. One commenter noticed over 20% of the reserves are in Shiba Inu:
A commenter highlights the 20% Shiba Inu reserve of Crypto.com, as of 11th November 2022. Source: Twitter
Crypto.com claims funds are held in a 1:1 ratio, hence the large holding. However, one Twitter user offers an explanation for outraged commenters:
A Twitter user explains how exchanges hold funds, and why. Source: Twitter
The #19 ranked exchange (for spot holdings) Huobi holds 1,853,296,059,759 (1.85T) Shiba Inu tokens in their reserve, worth $17.06 million at current prices.
The #4 ranked exchange Kucoin holds 4,438,701,419,929 (4.43T) Shiba Inu tokens in their reserve, currently worth $40.8 million. This is just a fraction of their $2.4 billion in total assets.
Another significant holder of Shiba Inu tokens is the popular exchange Bybit (ranked #11 for spot holdings and #2 for derivates). The rankings make sense, as we see that Bybit only holds 366,688,330,690.01 (366.68B) Shiba Inu tokens, totaling just £3.38 million. Bybit is very popular for derivates and future contract trading, which does not require a 1:1 ratio for holdings as the trader does not actually trade the token itself.
Vitalik Buterin ruffled some feathers in the Shiba Inu community after saying this at the LABITCONF conference:
“I do not understand the psychology of someone who holds $10 million in Shiba Inu right now”.
Potentially a comment aimed at large independent holders of Shiba Inu, as exchanges have made clear that their holdings are directly related to customer deposits and the ability to provide liquidity for them.
On the Flipside
- The Shiba Inu community has been calling for $BONE to be listed on top exchanges recently, with some success on some of the smaller platforms.
Why You Should Care
Proof-of-reserves are a positive way for exchanges to communicate their liquidity. While they should not provide readers with blind confidence in exchanges, they certainly do more to ease fears following the FTX insolvency.
What else is happening in the altcoin market?
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