Topic: If You Don’t Want to Meet FTX Collapses,You Should Know About TEX (Read 60 times)

The FTX collapse can be called the “Lehman Moment”,in which one of the top2 cryptocurrency exchange after Binance,stunned the entire crypto community.The cause of this event was the misappropriation of user assets, which brought about a crisis of trust in the entire industry.

This event highlights the vulnerability of the centralized financial system which forced many to reconsider the potential risks associated with the centralized exchanges(CEXs) because that we all know that FTX is not the first and will not be the last centralized exchange to experience challenges or collapse. Over the years, many centralized cryptocurrency platforms,including Celsius, BlockFi, Voyager, 3 AC, Axie Infinity, and Terra,they all have one thing in common that require users to trust them,and users can’t verify the truth of these platforms.

Some of the top exchanges, such as Binance and Coinbase, have faced challenges due to the event. In response, these exchanges have taken steps to demonstrate the safety and security of users’ assets and improve transparency and disclosure. One such measure is Proof of Reserve, which allows users to verify that the exchange holds the amount of cryptocurrency it claims to hold. However, Proof of Reserve is only a touchstone, and the long-term mechanism is the key. Vitalik Buterin, the co-founder of Ethereum, proposed a solution to this problem in the form of the Merkle root proof scheme, but it also has limitations and potential flaws.

In fact,the lack of transparency is a fundamental problem for centralized institutions, including cryptocurrency exchanges such as FTX be. To address this problem,we should not rely on centralized institutions to prove their innocence, because the cost of doing evil is very low, and this kind of trust cannot be verified.it is important to prioritize real transparency, which involve using smart contracts to provide users with public, transparent and verifiable data and information.Real transparency is a necessary condition for their survival and for the advancement of the industry as a whole.

Transparency is Trust
To address the occurrence of such incidents, we cannot take enforcement measures after the damage has occurred, but take pre-emptive measures to protect users and funds before the incident occurs.

If FTX which are composed of smart contract protocols,can offer greater transparency, traceability, and verifiability on the chain, users have greater control over their funds, and there is no need for centralized custody of assets. This can help to eliminate many of the centralized risks, such as fraud, unauthorized access, and market manipulation.

https://medium.com/@Tsp_Exchange/if-you-dont-want-to-meet-ftx-collapses-you-should-know-about-transparency-exchange-tex-56caef3c2eb2