Chainlink Labs released its proof-of-reserve tool as a solution to future trust problems in the crypto exchange market on Nov. 10. 

Specifically, Chainlink Labs reportedly posed the inquiry via a Twitter thread that “Will crypto continue to repeat the mistakes of the traditional black-box financial industry? Or will a better system emerge?”

“Will crypto continue to repeat the mistakes of the traditional black-box financial industry? Or will a better system emerge? A better system is possible, & Proof of Reserve is one way #Chainlink is providing the transparency that users demand.”

As a response to this inquiry, it provided its proof-of-reserve (PoR) solution, which it claimed to offer usefulness in “verifying centralized exchange asset reserves, off-chain bank account balances, cross-chain collateral, real-world asset reserves, and much more.”

Throughout the last few days, the crypto market has been experiencing a freefall because of a liquidity turmoil at the global second-most major crypto exchange, FTX. 

The exchange has not had success in finalizing withdrawals in a timely fashion, and the panic caused by these delays has spread across the crypto market.

In the wake of these ongoing problems, the crypto community has commenced discussions for measures to fix the issue, and one solution that has popped up is for clients to make it mandatory that every exchange they use offer a proof-of-reserve.

Proof of reserve functions as a technique that makes it possible for users to audit the reserves of crypto exchanges in real time. 

A few exchanges have already carried out the implementation of proof of reserve, and current Head of Binance Changpeng Zhao has argued that all exchanges should now offer this feature.