Proof of Reserves (PoR) is a common audit method used to ensure that a custodian actually holds sufficient funds to cover all assets held on their exchange.

HTX adopts the Merkle Tree method to verify that our users' assets are always backed 1:1 by our reserves. Here's how PoR works:

1. Snapshots of all users' balances are taken to generate a Merkle tree. The Merkle tree contains the encrypted data of assets held by all users in the exchange.

2. The Merkle root is the final node in the Merkle tree. A single hash (consolidating the hash of all transactions) and the total balances when the snapshot is taken can be obtained from the Merkle root.

3. The digital signatures of HTX's on-chain wallet addresses are verified to prove ownership over the addresses and obtain publically verifiable balances.

4. Finally, the total balances held in on-chain wallet addresses are compared with the total balances provided by the Merkle root to verify whether the users' assets are always backed 1:1 by our reserves. The data will show that HTX has sufficient funds to cover all our users' assets. (See example below)

Green: Alice's snapshot asset balance; Blue: The path that Alice will receive as a part of the proof; Orange: Merkle root

HTX reserves the right in its sole discretion to amend or change or cancel this notice at any time and for any reasons without prior notice. The above is for information purposes only and HTX makes no recommendations or guarantees in respect of any digital asset, product, or promotion on HTX.