How to analyze the financial solvency of an exchange? - Let's use Binance as an example
A big greeting friends of Steem Alliance, my best wishes to everyone in this last month of the year.
Today I bring for everyone a content that I consider very important, because it is useless to make financial life in an ecosystem where we can easily verify some important aspects of security and balances if we do not know how to do it.
One of the main features of the blockchain is that everything is recorded, and with the right tools we can see the movements, all transactions and not only that, but also see the assets that could be in a particular wallet.
This is information that we cannot easily access when we refer to traditional banking. For example, the wallets in Steemit are open to the public, and with a block explorer like Steemworld we can see everything about a particular account.
On the Blockchain everything is visible
Currently there is a great distrust sown in Binance, the world's leading exchange, due to the legal problems it recently presented in the United States, where it had to pay a fine of more than 4 billion dollars and the fact that its CEO resigned from the position.
This has caused rumors to spread and sow a lot of distrust in Binance, however I would particularly like to highlight some important things.
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Binance's problem was years ago, when it was starting out, there were no filters in place to prevent terrorist groups from laundering money. But it never incurred in misuse of user funds, it is very important to keep this in mind.
And the other thing that is very important to consider is the funds that it maintains, being for me something relevant, indispensable. Because it is what gives the vision of the greatness of its market. Of its capitalization. And this is very easily verifiable.
I will provide two simple tools to know the amount of funds that Binance has. On the one hand we have the Binance Reserve test, the same that the Exchange shares in an updated way every first of the month, where you can clearly see what it has officially in its wallets.
Here it is important to note that we see percentage figures that are up to 118.83%, i.e., that the amounts held (2) are above what users have deposited (1). That is to say, if all the users together have 100 million USDT, in the wallets there are 118 million USDT, this speaks of Solvency..
Of course, people might think that these values can change from one moment to another, considering that they are published monthly, it does not seem so reliable to them. For this, we have another tool that allows us to see this information in real time, this is DEFILLAMA.COM
As we can see, below we will make a comparison of the data that this tool allows us to verify. I will use as a point of comparison the amount of USDT that both the reserve test and Defillama reflect.
As you can see, there is an amount of billions of USDT, obviously there is a difference between what the reserve test says and this tool, and it is normal since one was published at the beginning of the month and the other reflects the current.
Keep in mind that this will always vary, as finance is dynamic, and the money in the excahanges is always on the move. But even so, it has varied little based on the data provided by Binance a few days ago.
Conclusion
This, at least for me, gives me security regarding the use of Binance, because it is still the strongest of all the ecosystem. Of course, each person must do their respective research and verify the respective data.
If you want me to show in detail how to use Defillama to get important information step by step, you can leave it in the comments and I will gladly do it.
I hope this information has been a good contribution for you.
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This is an interesting post on the analysis of financial solvency.
Keep sharing quality post in the community
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Thank You.
With great pleasure. thanks for the verification. It is good to be able to provide value in content