Vitalik Buterin, one of the founders of Ether, is working on a new protocol set that’d enable exchanges to disclose to their clients the reserves they have in place in the wake of the collapse of renowned cryptocurrency exchange FTX.
Exchanges must be transparent, according to Vitalik Buterin
The sudden and unanticipated “liquidity constraint” the firm appeared to experience at the last minute was one of the major factors that purportedly contributed to FTX’s downfall.
Online posts claimed that Sam Bankman-Fried, the executive in charge of the company, had contacted his larger rival, Binance to explain that there had been a sudden shortage of money and that Binance would profit by purchasing the smaller company.
It appeared as though this might happen for a time, but Binance subsequently said that it would not proceed with the acquisition since FTX was struggling with far too many problems and nothing its team could do. As a result, FTX later became unstable.
Buterin believes it’s crucial for all cryptocurrency exchanges to be able to demonstrate right away that they have the resources necessary to survive even in the worst situations in order to guarantee that this never occurs again.
He claims that by doing this, customers would be able to trust the firms they choose to do business with and understand exactly what they’re getting into.
Currently, Buterin intends to utilize Binance as a type of test platform for his new set of protocols, using the exchange as a kind of guinea pig.
The creator of the trading platform, Changpeng Zhao, asserted in an interview that he doesn’t believe any suspicious activity is connected to it.
Zhao cannot speak for other players because he hasn’t seen their books, but it’s not a wise move. Zhao has no idea whether they actually do have a good cause for doing it.
Zhao and his colleagues have made all of their cold wallet addresses public since they anticipate it (the Merkle tree) in a few weeks. Users at least know how much many they have, even though it is not as excellent as a Merkle tree.