OKX adds ZK-Starks to proof of reserves verification

Quick Take

  • OKX incorporated ZK-Starks into its proof-of-reserves (PoR) verification system.
  • The new PoR system allows users to independently verify assets while preserving privacy.

Centralized crypto exchange OKX has integrated a type of zero-knowledge proof mechanism called ZK-Starks into its proof-of-reserves (PoR) verification, enabling users to independently verify its assets while keeping sensitive user data private.

ZK-Stark (Zero-Knowledge Scalable Transparent Arguments of Knowledge) is a cryptographic mechanism that claims to let users to independently confirm the accuracy and authenticity of the exchange's reserves without exposing account balances to other parties.

Leveraging ZK-Stark technology, OKX's Proof of Reserves (PoR) system claims to be a more privacy-focused verification of the exchange's reserves for 21 crypto assets. The exchange noted it is a "method that verifies the accuracy and authenticity of OKX's PoR while upholding user privacy — no account balances are visible to other parties."

As detailed in the exchange's most recent PoR report, the combined value of bitcoin, ether and tether reserves has risen to $10.7 billion, an increase from the $8.9 billion reported in March. OKX has also expanded PoR support to include 18 new assets, in addition to the existing coverage of bitcoin, ether, and tether. However, the system does not provide insights into the exchange's potential liabilities.

OKX registered trading volume of $1.08 billion in the last 24 hours, according to CoinGecko data.


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OKX added privacy to Merkle Tree-based proof of reserves

Previously, OKX's PoR system relied solely on the Merkle Tree — a data structure used in cryptography for verification. This method was not deemed ideal for user privacy, prompting the decision to incorporate zero-knowledge proofs. In February, Binance, the largest crypto exchange by trading volume, also added zero-knowledge proofs to its PoR system in an effort to enhance privacy.

Over the past six months, centralized exchanges have placed greater emphasis on proof of reserves, addressing users' concerns regarding the security of their funds in the aftermath of FTX's bankruptcy due to a bank run and subsequent bankruptcy protection filing in November 2022.

This incident exposed that the exchange had failed to maintain a 1:1 backing for its customer assets, leading to major industry crisis that subsequently prompted most other exchanges to adopt increased transparency surrounding their reserves.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Vishal Chawla is The Block’s crypto ecosystems editor and has spent over six years covering tech protocols, cybersecurity, artificial intelligence and cloud computing. Vishal likes to delve deep into blockchain intricacies to ensure readers are well-informed about the continuously evolving crypto landscape. He is also a staunch advocate for rigorous security practices in the space. Before joining The Block, Vishal held positions at IDG ComputerWorld, CIO, and Crypto Briefing. He can be reached on Twitter at @vishal4c and via email at [email protected]


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