The Vibe: Exchanges publicly prove they hold 1:1 (or more) of users’ crypto in real wallets—no funny business with customer funds.
The Details: Proof of Reserves (PoR) is a verification process where centralized exchanges (CEXs) cryptographically show they control enough on-chain assets to cover all user deposits. It often uses Merkle trees for private user balance aggregation plus signed proofs from reserve wallets, with third-party audits or attestations. Popularized after FTX collapse, major CEXs like Binance, OKX, Bybit publish regular PoR reports (often >100% coverage) in 2026 to build trust and demonstrate solvency.
Pro Tip: Always check a CEX’s latest PoR report before depositing large amounts—look for recent dates, over 100% coverage, and Merkle verification. Prefer non-custodial wallets for long-term holding to avoid any counterparty risk.