A Proof-of-Reserves (PoR) tool allows all users to verify that their balances are actually backed by real assets held in Phemex wallets. The system employs Merkle trees, a data structure that reflects all user balances without revealing sensitive private information.
All Phemex user accounts, with their unique IDs, are hashed with a random nonce and aggregated to produce a Merkle tree of all exchange balances.
At the very top of this tree stands a Merkle root, representing the sum of all account balances for any given snapshot. This is an incredibly tamper-evident system, as the most minute modifications to any data on this tree would result in a completely different Merkle root.
At Phemex, we provide you with the Merkle root hash of all our accounts, your individual hashed client ID, and a tool that allows you to easily check the inclusion of your assets within the tree.
For a step-by-step tutorial on this tool, please read “How do I use the Phemex Proof-of-reserves (PoR) tool?”
Having each user check that their balances have been accurately included in the Merkle-tree is only half of the equation. Our PoR page will also allow you to download all of the individual anonymized balance data. The sum of all these balances must be equal to or less than the total assets in our wallet reserves.
Of course, our cold wallet addresses are also provided on our PoR page.
We believe our Phemex PoR system is superior to others in many ways. While many of our competitors have either only provided proof of their wallet assets alone or proof of their platform balances/liabilities alone, we provide both.
Additionally, we openly encourage all users to verify their assets. If even a single user’s balance has not been included in our Merkle tree, we welcome you to make it known to the world.
In the interest of responding to our customers’ requests and concerns with haste, this first iteration of our PoR supports BTC, ETH, USDT, USDC, and USD (trading account) balances. Balances of other tokens will not show up in our current iteration of PoR. We will continue to develop and improve this system, with more token balances to be included in the future.
