Binance CEO CZ begins working on Vitalik Buterin's ‘safe CEX’ ideas
The collapse of numerous major crypto ecosystems in 2022 revealed the urgent need for revamping the way crypto exchanges operate. Ethereum (ETH) co-founder Vitalik Buterin believed in exploring beyond “fiat” methods to ensure the stability of crypto exchanges, including technologies such as Zero-Knowledge Succinct Non-Interactive Argument of Knowledge (ZK-SNARKs).
Following a discussion with angel investor Balaji Srinivasan and crypto exchanges such as Coinbase, Kraken and Binance, Buterin recommended options for the creation of cryptographic proofs of on-chain funds that can cover investor liabilities when required, a.k.a, safe centralized exchanges (CEX).
Having a safe CEX: proof of solvency and beyondhttps://t.co/AKEweYZfj2Big thanks to @balajis and staff from @coinbase @binance @krakenfx for discussion!
The best case scenario, in this instance, would be a system that does not allow crypto exchanges to withdraw a depositor’s funds without consent.
Vitalik's new ideas. Working on this. Just don't read the title aloud around people (Vitalik wrote it).https://t.co/AtR6KiSx5B
Fellow crypto entrepreneur CZ, who has been vocal about Binance’s intent for complete transparency, acknowledged the importance of Buterin’s recommendations, stating that:
The earliest attempt to ensure fund safety was proof-of-solvency, wherein crypto exchanges publish a list of users and their corresponding holdings. However, privacy concerns eventually fueled the creation of the Merkle tree technique — which dampened the privacy leakage concerns. While explaining the inner workings of the Merkle tree implementation, Buterin explained:
As a result, Buterin placed his bets on cryptography via ZK-SNARKs. For starters, Buterin recommended putting users’
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