Binance Reserves See Net Inflow of $3.27B According to Latest Report

The latest Binance Proof of Reserves audit shows increases in BTC holdings, with a net inflow in overall assets.

Curtain revealing a Binance robot with a pile of coins.
Created by Kornelija Poderskytฤ— from DailyCoin
  • Binance saw positive net inflows in September. 
  • Net positive number of Bitcoin holdings reported. 
  • Subsequently, the market crash contributed even more.  

Despite the recent market crash, crypto markets have grown steadily in the past months. This is seen in Binanceโ€™s latest proof of reserve report, notably in figures revealing Bitcoin holdings and holdings overall. 

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In July, Binance registered a net inflow of $3.27 billion, with Bitcoin holdings growing. This is significant as most crypto holders interact with the market through centralized exchanges like Binance. 

Binance Sees Significant Net Inflow

Over the past month, Binance has seen significant inflows and changes to its asset ratios. On Wednesday, August 6, Binance released the results of its 21st Proof of Reserves audit, showing the amount of reserves relative to user holdings on August 1. While the report showed that all assets are collateralized, it also revealed net inflows of $3.27 billion over July, according to DeFiLlama.  

Binance reserve ratios and quantities by major crypto asset.
Source: Binance

The Proof of Reserves audit also highlighted specific changes in user asset balances. For one, user holdings in Bitcoin increased by 1.29%, amounting to 613,471 BTC. Moreover, Bitcoin reserves were at 106.34% collateralization, with Binance holding 652,370 BTC. 

Other major assets saw outflows. At the same time, Ethereum and Tether holdings decreased by 0.21% and 1.52%, respectively, to 4.701 million ETH and 21.19 billion USD. Both assets are still overcollateralized, by 113% for USDT and 103% for ETH. 

How the Proof of Reserves Audits Work

Binanceโ€™s audit is a snapshot of user balances at a specific point in time. For the August audit, this snapshot was taken on August 1, 2024, at BTC block height 854872, detailing the amount of assets at that specific time. 

To verify the reserves, Biance uses zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge). Specifically, zk-SNARKs allows Binance to prove that the total user asset balance is correct without revealing individual account details.

A Merkle Tree is a data structure that efficiently and securely verifies the integrity of large data sets. It allows consolidating all user balances into a single hash (Merkle Root Hash) that can be independently verified.

On the Flipside

  • Zero-knowledge proof and Merkle Trees became popular after the FTX crash when the transparency of crypto companies was questioned. 
  • Despite transparency efforts, some experts have questioned the efficiency of proof of reserve audits. 

Why This Matters

Proof of reserve audits are critical for maintaining trust in centralized crypto exchanges. Without transparency, many users would leave the platforms for fear of losing their funds.ย 

Read more about the criticism of proof of reserve reports:ย 
Post-Binance Reality: Is Proof of Reserves Idea Compromised?

Read more about Solanaโ€™s performance during the crypto market crash:ย 
Solana Proves Robust as Market Crash Brings Major Banking Giants Down

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
David Marsanic

David Marsanic is DailyCoinโ€™s journalist, focusing on Solana and crypto exchanges. David currently doesnโ€™t hold any crypto.

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