Gate.io's 100% reserve proof has passed the Hacken audit, with January data showing a total reserve amount of $4.3 billion.

24-02-01 14:19

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Source: Gate.io

In the field of digital assets, security and transparency are the most concerned topics for users. Recently, blockchain network security company Hacken conducted a comprehensive and rigorous audit of the reserve proof of well-known cryptocurrency exchange Gate.io.

It is reported that the auditing firm Hacken is a cybersecurity company dedicated to providing comprehensive security auditing and vulnerability assessment services for various cryptocurrency exchanges and blockchain projects, including Binance, NEAR, 1INCH, etc., to ensure the safe operation of their systems. Hacken conducted a security review of Gate.io's reserve fund scheme in January 2024, including dependency management, encryption frameworks and structures, code quality and documentation, error handling, as well as testing and sample data. The results showed that no serious issues were found. Hacken pointed out in the report that Gate.io's reserve fund scheme has achieved a good balance between functionality and complexity, demonstrating a clear understanding and application of key principles of blockchain technology and encryption systems.

Hacken's official team released the Case Study of this audit on X platform.

According to the latest report released by Gate.io, the total reserve amount in January 2024 was $4.3 billion, which increased by $1.1 billion or 36% compared to the official reserve amount of $3.2 billion announced in November 2023. The overall reserve ratio is 115.47%, covering more than 170 currencies. It is worth noting that in addition to the total reserve amount of various assets, the Gate.io wallet balance still exceeds $584 million, which also has a certain increase.

Hacken's audit details for Gate.io's PoR

Hacken believes that the most critical enhancement of the project, based on a comprehensive review of Gate.io's PoR audit report and the latest release of the report explanation, is the addition of zk-SNARK verification, which eliminates the weaknesses in the previous reserve plan that may allow false accounts with negative balances, potentially altering the accuracy of the data.

The report also shows that the Gate.io PoR scheme uses the following encryption frameworks and structures: a fork of GNARK is used to build encrypted circuits, and the Poseidon hash function with BN254 curve is used to hash user data and sparse Merkle tree (SMT) structures. The BSMT library is used to implement SMT with a maximum depth of 28, allowing the solvency proof system to accommodate more than 250 million users.

Hacken conducted a thorough analysis of project documentation, repository code, code structure, and architecture quality, and checked new version tags and features. By extensively checking known vulnerabilities, including verifying checksums for all 1157 dependencies, the main goal was to assess whether the code has vulnerabilities to known attacks or malicious code, and to verify whether there are any issues in the build process, deployment, and architecture design.

After a comprehensive evaluation, no serious, high, medium, or low-level vulnerabilities were found. However, some informational issues were identified. Hacken recommends that the Merkle root should be signed by a trusted third-party auditor or published on the blockchain to verify its integrity. They also suggest updating to the latest version of GNARK to reduce security risks and improve efficiency.

Quoted from Hacken PoR audit report

Regarding the audit results, Dr. Han Lin, the founder of Gate.io, said: "Thank you to Hacken for our security audit. This is a valuable opportunity for us to exchange ideas. We value the supervision and feedback from the community and the industry, which will drive us to continuously improve. The Gate.io team will continue to strengthen the construction of security, privacy, and transparency, and build a secure and trustworthy digital asset trading environment."

Gate.io CEO attended a Space discussion with Hacken on 2023/1/26

Gate.io January reserve total amount is 4.3 billion US dollars, with a reserve rate of 115.47%

Gate.io has released its Proof of Reserves (PoR) report for January 2024, following an audit by Hacken, which shows a total digital asset holding of $4.3 billion and a reserve ratio of 115.47%, exceeding user deposits of $584 million. Compared to the report from November last year, the value of PoR has increased by $1.1 billion, a growth of 36%. This marks the fourth year that Gate.io has published a user-verifiable PoR report.

2024 January 13th, PoR latest data sourced from Gate.io official website

The latest Gate.io reserve report covers over 170 types of digital assets, which is the highest among all exchanges. Since the last report, 59 new assets have been added, including 26 BRC20 tokens such as RATS, SATS, ORDI, and MUBI. The report shows that the reserve ratio of each asset exceeds 100%. Among them, the total reserve of BTC is 17,631 coins, the total reserve of USDT is 708,409,147 coins, and the total reserve of ETH is 208,811 coins.

Mainstream and stablecoin PoR latest data sourced from Gate.io official website

Users can verify their deposits and view other detailed information on the Gate.io 100% Reserve Official Website by following the official verification guidelines.

Reserve Verification Process from Gate.io Official Website

Why do exchanges implement 100% reserve?

Reserve proof is a method for users to verify whether an exchange has enough digital assets to meet user withdrawal demands. The widespread adoption and application of 100% reserve proof between exchanges is to ensure the safety of users' digital assets and avoid the risk of exchanges being unable to meet user withdrawal demands. After the FTX incident in 2022, major exchanges have responded by implementing 100% reserve proof to "prove their innocence". Gate.io has also actively responded and open-sourced its reserve proof technology solution.

It is reported that Gate.io has been implementing reserve proof since 2020. It is one of the earliest exchanges to use Merkle Tree technology to generate and verify reserve proof through third-party audits. In 2023, it will adopt zero-knowledge proof (zk-SNARK) technology, which can prove the total assets and reserve ratio of the exchange without revealing user privacy and exchange asset details.

Dr. Han Lin, founder of Gate.io, said that the cryptocurrency industry often experiences various FUD emotions such as panic, uncertainty, and doubt, which are detrimental to user confidence and industry development. Transparency is the key to solving this problem, as it allows users to participate in the market with confidence and promotes fair competition between exchanges. Gate.io has always attached great importance to the necessity of reserve funds, allowing users to verify their assets at any time and not be affected by rumors.

Overall, by introducing zero-knowledge proof technology and undergoing third-party audits, this more sophisticated reserve fund system helps users verify the financial status of exchanges and improves the overall security level of the industry. For exchanges, implementing a highly transparent reserve fund system through audits will also strengthen user trust in the platform and enhance the exchange's position in industry competition.