What Is the Significance of Introducing Third-party Audits to the Exchange? Understand What Proof of Margin Is
Since the beginning of this year, the market has been in a continuous downturn, and the calls for supervision have been rising one after another, bringing more uncertainty and turbulence to the crypto field. In digital asset trading, asset management has always been the most important thing for users. Whether the exchange can truly manage user assets fairly, transparently, and safely is the first factor for all users to consider before conducting digital asset trading.
In traditional finance, solvency is one of the key aspects for customers to evaluate a financial institution. Therefore, users often rely on some authoritative third-party audit institutions for reference. This situation also applies to the field of cryptocurrencies, especially in the field of centralized digital asset exchanges that people are generally used to.
The reason why centralized exchanges have been recognized and welcomed by people is that they have several advantages over the non-custodial system, such as lower latency, higher capacity, and outstanding features such as maintaining trust and privacy before execution.
Generally speaking, the Proof of Reserve (PoR) mechanism can verify its real solvency performance in the field of centralized exchanges.
Therefore, the PoR is one of the major reference indicators for people to trust a centralized digital currency exchange.
Currently, Gate.io’s reserve assets have been audited by Armanino and can provide a 100% margin for users. Users can view the results on the official Armanino website.
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What Is the Proof of Margin?
The Proof of Margin enables users to verify whether their digital assets are fully retained in the exchange in an encrypted manner. Meanwhile, users can choose an exchange that is more in line with some of the current international regulatory needs based on whether the exchange has Proof of Margin as one of the priority options.
The Proof of Margin shall be audited by an independent third-party company. The main purpose of the audit is to confirm whether the total assets managed by the exchange are consistent with the user’s book balance. Generally speaking, if the total amount of tokens held and effectively controlled by the exchange on the blockchain is greater than or equal to the total amount of tokens held by all users of the platform, the platform will provide a 100% margin for the tokens.
Gate.io stores the hash value of each user’s account asset in the way of a Merkle Tree in the leaf node of the Merkle Tree by providing the certificate of total assets owned by the platform user and the valid user’s margin. The third-party financial audit institution audits the total amount of user assets stored in the leaf node of the Merkle Tree, and reviews and compares the number of valid margins held by the platform to determine whether the user’s assets are backed by full margins.
Details of Gate.io’s Proof of Margin as of November 2, 2022
TrustExplorer is a proprietary blockchain security technology suite of Armanino, designed to increase trust for participants in the digital asset industry. Proof of Reserves (PoR) is one of the flagship solutions of TrustExplorer and an authoritative data reporting and verification solution, so as to enable the digital asset platform to prove and represent the assets held by customers.
The asset verification model has been patented by Gate.io in 2020. The PoR audit conducted by the Exchange in this mode has become one of the standard steps for the industry to verify asset security. Gate.io’s strategy also provides the industry with a new standard for asset security verification.
What Does the Proof of Margin Mean to Users?
Safe and regular
The user’s assets on the Gate.io platform are guaranteed to exceed 100% of the margin and are regularly accounted for by a third-party audit platform.
Smooth 24x7 transaction
Users’ capital needs can be quickly satisfied at any time based on a smooth 24x7 liquidity guarantee.
Transparent and convenient
Users can verify whether their assets are included in the audit on the official Armanino page, or download and view the margin audit report.
The following is the method to verify whether user assets are included in the audit:
Go to the third-party audit platform Armanino, and pull down the page until you see the figure below.
In the box on the left side of the page, fill in the information as prompted to check whether your account has been included in the audit.
Safety First, User Priority
Gate.io has always been developing towards higher transparency and security, improving the security of user assets and enhancing market confidence. Cooperation with a credible third-party audit is only a small part of the development process of higher transparency and security, Gate.io will continue to maintain a safe, fair, and transparent trading environment and help the healthy and stable development of the digital asset market.
