DeFi Could Herald End of Centralized Exchange, Binance Exec Says

Binance is reportedly working on “proof of reserves” to reassure customers after FTX’s collapse. 

Also, a company executive said that with the emergence of decentralized finance (DeFi), Binance’s centralized exchange may not exist in 10 years. 

With rival cryptocurrency exchange FTX having gone bankrupt, Binance wants to implement a way to show its own customers that their assets are fully backed, CoinDesk reported Thursday (Dec. 1). 

“It will be a multistep process, including bringing in a third-party auditor,” Binance Chief Strategy Officer Patrick Hillman said, per the report. “It takes time to go and be able to conduct an audit of the scope and scale that is required of Binance.” 

The implementation will take time because Binance is almost larger than the combined totals of the New York, London and Tokyo stock exchanges, Hillman said, according to the report. 

Still, the firm is working on its Merkle Tree analysis that will enable its customers to verify their assets on the platform, the report said. 

“In the end the marketplace is going to mandate this,” Hillman said. “That’s it. There’s no ifs, ands or buts about it.” 

In another effort to settle a cryptocurrency industry that has been reeling from the collapse of FTX, Binance CEO Changpeng Zhao has pledged to set up a crypto recovery fund that would “help projects who are otherwise strong but in a liquidity crisis.” 

“Crypto is not going away,” Zhao wrote when announcing the plan. “We are still here. Let’s rebuild.” 

Zhao said days later that the proposal had already drawn a positive response from firms interested in contributing, though he declined at the time to name the organizations or detail the anticipated size of the fund or the amount Binance would contribute. 

“There are players that have strong financials and we should band together; we’ve got significant interest so far,” Zhao said, Reuters reported Nov. 16.