What Are Zero-Knowledge Proofs and How Do They Improve Proof of Reserves?

Publishing transparent and frequent Proof of Reserves (PoR) is crucial for centralized exchanges aiming to prove their solvency.

OKX currently uses Merkle tree verification to demonstrate that the total on-chain assets held match or exceed customers' deposits. While this is a significant step forward, it isn't ideal from a privacy perspective. An upcoming upgrade will enhance the existing Merkle tree solution by integrating zero-knowledge (zk) proofs, ensuring maximum transparency while safeguarding customer privacy.

👉 Verify OKX's reserves

TL;DR

• Proof of Reserves (PoR): A method for centralized crypto exchanges to prove solvency.
• Zero-knowledge proofs for PoR: A cryptographic technique enabling verification of deposits in PoR without exposing sensitive customer data.

What Are Zero-Knowledge Proofs?

Zero-knowledge proofs (ZKPs) are cryptographic tools that allow one party (prover) to convince another party (verifier) that they know specific information without revealing the information itself.

Simple Example: Proving Access Without Revealing Secrets

Imagine Alice wants to prove to Bob that she knows a secret password—without telling Bob what it is.

1. Bob sends a random phrase to a secure email account.
2. Alice logs in (using the password) and retrieves the phrase.
3. If Alice tells Bob the correct phrase, Bob can trust she knows the password—all without Alice ever revealing it.

While real-world ZKPs involve complex cryptography, the core principle remains: verification without disclosure.

How Do Zero-Knowledge Proofs Enhance Proof of Reserves?

OKX is committed to advancing transparency in PoR audits. Since November 2022, OKX has:

• Published monthly PoR reports.
• Hosted public AMAs on Twitter Spaces.
• Released thousands of wallet addresses for asset tracking.

Soon, OKX will integrate ZKPs with Merkle tree verification to:

1. Hash customer balances into a cryptographic commitment.
2. Generate a ZK proof confirming reserves match or exceed deposits.
3. Prove solvency without exposing individual balances.

This upgrade ensures customers can trust OKX’s reserves while maintaining full financial privacy.

👉 Explore OKX’s Proof of Reserves

FAQ: Zero-Knowledge Proofs & Proof of Reserves

1. Why are zero-knowledge proofs important for PoR?

They allow exchanges to prove reserves without compromising user privacy.

2. How do ZKPs differ from traditional Merkle tree verification?

Merkle trees reveal partial data; ZKPs verify everything without exposing any data.

3. Will OKX’s upgrade affect user experience?

No—users can still verify their deposits while benefiting from enhanced privacy.

4. Are ZKPs secure?

Yes! They rely on advanced cryptography and are mathematically tamper-proof.

5. Where can I check OKX’s reserves?

Visit OKX’s monthly PoR reports for real-time verification.

👉 Confirm your assets are secured