Firm Launches Crypto Assets Dashboard; Takes Aim at CEX Transparency
Posted by Colin Lambert. Last updated: December 8, 2022
Woo Network, which operates a cryptocurrency exchange, Woo X, has launched what it terms a “transparency dashboard” to offer 15-minute snapshots of proof of assets and where they are held; information on liabilities, as well as “additional information related to transparency”. At the same it has published analysis of other centralised exchanges (CEXs) which finds that only five out of 51 are publishing “live” asset/liability data.
The firm observes that solutions have been put forward after the FTX collapse, but many, including proof of reserves, fall short of establishing consumer trust. It argues that proof of reserves is the equivalent of a bank showing how much capital it has, but not showing how much its owes.
Audited records are an important part of the push for greater transparency but have limitations in isolation, Woo Network says, adding that it believes that the value of the auditors is greater when they can also verify methodologies and identify whether inputs are accurate. “As of today, many auditors still lack the knowledge to evaluate cryptocurrency exchanges fully,” it claims.
“We arrived at this solution by coming up with a wish list for what we want to see from other exchanges,” says Jack Tan, co-founder of Woo Network. “So we are holding ourselves to the same standard and being the first to act with this type of radical transparency and live data. Our transparency dashboard is just one of the steps towards our goal of making CeFi more transparent than traditional banks and financial institutions.
“The practice of using market-makers and other venues to enhance liquidity is widely used but has never been particularly transparent until now,” he continues. “From job postings for internal market-makers by CEXes to the contract fine print enabling the rehypothecation of client assets on Wall Street, this is a trend of opacity that originated in traditional finance and has crossed over into crypto.
“Going forward, users need to know how much risk is taken with their assets and which venues are being used, an area in which we are now leading the way,” he argues.
In what it says was an “informal survey” on 4 December 2022, Woo says it checked the websites and Twitter accounts of the top 50 exchanges (plus Woo X) on CoinMarketCap for statements about proof of reserves. Out of the 51 exchanges surveyed, only 18 have proof of reserves statements that can be found either on their websites or Twitter posts, Woo claims, adding, “A few of those 18 exchanges have a dedicated page that talks about their proof of reserves while some posted the information directly on their Twitter pages.”
It adds that only five exchanges are providing live data, Woo X, Kraken, Korbit, Phemex and one other. Out of 18 exchanges that have shown their proof of reserves, seven have also displayed their liabilities, it adds.