Deribit’s Merkle-Based Proof of Reserves and Verification Process
Summary
The document explains Deribit’s proof-of-reserves approach, combining a customer-liability snapshot with on-chain asset disclosures. Its modified Merkle tree uses concealed, asset-specific balance entries so customers can verify their own inclusion without publicly exposing individual balances. Users can also check a signed proof identifier and derive their liability entries from the daily snapshot using the stated hashing procedure. The exchange says its disclosed on-chain assets should cover the liabilities represented in the snapshot, with additional reserves held outside customer liabilities.
The evidence described consists of daily asset and liability files, public wallet addresses, customer-level verification data, and a real-time endpoint for initial and maintenance margin totals. The document notes limits: assets held by third-party custodians are excluded from the asset file, snapshots can differ temporarily as markets move, and proof verification depends on the published data and cryptographic procedures. It describes a verification framework, but does not provide a current reconciliation or independent audit result.
Key ideas
- A modified Merkle tree lets customers verify their own liabilities while concealing their balances from other users.
- Daily snapshots and signed proof identifiers support customer checks of inclusion in liability and asset data.
- Users can derive their liability entries from the snapshot using the documented hashing steps.
- The exchange compares disclosed on-chain assets with snapshot liabilities and describes additional reserves beyond customer obligations.
- Third-party custodied assets are excluded, and daily snapshots may diverge temporarily as markets change.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.