#BTCReserveStrategy 1. Proof of Reserves (PoR)

• Binance uses Proof of Reserves to publicly verify that it holds users’ assets 1:1.

• This is done through Merkle Tree audits, which are cryptographic tools that allow users to verify their individual balances are included in Binance’s total reserves.

• Example: Binance has published PoR for major assets like BTC, ETH, BNB, USDT, etc.

2. 1:1 Asset Backing

• Binance states that every user deposit is fully backed and can be withdrawn at any time.

• This means they don’t lend out or use customer assets without permission.

3. SAFU Fund (Secure Asset Fund for Users)

• Binance maintains a SAFU fund, an emergency insurance fund established in 2018.

• A portion of trading fees goes into this fund, which is used to cover user losses in extreme cases.

• The SAFU fund is often held in separate wallets and is publicly trackable.

4. Wallet Transparency

• Binance publishes wallet addresses of their cold and hot wallets so the public can monitor asset movements and balances.

• This adds an extra layer of accountability and transparency.

5. Third-Party Audits & Community Validation

• Binance encourages third-party auditors and the community to inspect and verify reserve data.

• However, unlike traditional audits, PoR lacks standardization and is still evolving across the industry.

Summary

Binance’s reserve strategy focuses on:

• Proving they hold enough assets to cover all user deposits (via PoR).

• Maintaining public trust through transparency (wallets, SAFU).

• Providing insurance via SAFU in emergencies.

Not using fractional reserve practices (unlike banks)