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Proof of Reserves at Backpack Exchange: Real Transparency, ZK Verified
When you move your assets onto an exchange, you’re not just making a transfer you’re placing confidence they’ll be there tomorrow, next week, or next year. That trust is the invisible backbone of finance. But in crypto, we can give it something even stronger to lean on: proof.
Proof of Reserves is that proof. It’s a cryptographic method that allows anyone to independently verify that an exchange’s on-chain and off-chain assets are equal to or greater than its total customer liabilities. It uses cryptographic proofs to show every user’s balance is included in the total, without revealing individual account details. The result is a real time, privacy-preserving view of solvency.
At Backpack, we've built the industry's most advanced Proof of Reserves system, featuring continuous real-time transparency powered by zero-knowledge proofs. This ongoing commitment to openness sets a new standard, ensuring trust is never your only option. You can see the numbers, check the math, and verify your funds are there.
Why It Matters
When you deposit funds on an exchange, you’re placing trust in the fact that your assets are safe and available when you need them. That trust is important — but it doesn’t have to stand alone.
Proof of Reserves adds a second layer: mathematical certainty. Using cryptography, an exchange can publicly prove it holds enough assets to cover every customer balance.
It’s not:
- A marketing claim
- An audit you read months later
It is:
- A verifiable snapshot you can check yourself
This shifts the balance of power. You no longer have to rely solely on an exchange’s word, you can confirm the facts. Trust remains, but now it’s trust backed by math.
The Problem With Limited Proofs
Many exchanges do implement Proof of Reserves but in ways that fall short:
- Proofs run only monthly or yearly
- Risk factors like margin positions and unrealized PnL are excluded
- Data is stale by the time it reaches users, offering a historical snapshot instead of current reality
The result: you still end up relying on trust more than you should.
Backpack’s Approach
Backpack Exchange takes Proof of Reserves further making it real-time, zero-knowledge, and fully verifiable by anyone. Our implementation, PoRv2 powered by Plonky2 zero-knowledge proofs, delivers four key guarantees:
- Total solvency proof – All user balances collectively match the exchange’s total liabilities for each asset.
- Account integrity confirmation – No negative balances exist anywhere in the system.
- Personal verification – Any user can confirm their account’s inclusion via a Merkle tree.
- Privacy protection – Only cryptographic commitments are shared; no raw balances are ever exposed.
Proof Frequency That’s Unmatched
Backpack runs proofs at a pace no other exchange matches:
- Public proofs: Daily, versus an industry norm of about once a month (~12 per year).
- Internal checks: Real-time reconciliation with new proofs generated every 10 minutes.
- Full coverage: Includes spot balances, margin positions, and unrealized PnL.
- Independent oversight: Continuously monitored by security partner OtterSec.
Built for Resilience
Our technical architecture, built in collaboration with OtterSec, removes single points of failure. Every transaction flows through multiple independent systems, and even if Backpack’s servers were compromised, the mathematical constraints of the proof system mean attackers couldn’t move user funds.
By using recursive Plonky2 proofs, we can demonstrate solvency without revealing individual account details — proving safety without sacrificing privacy
How to Verify Your Balance
Backpack’s Proof of Reserves isn’t just a statement — it’s something you can check for yourself. Verification can be done at both the individual account level and the entire exchange level.
1. Verify Your Individual Account
- Download the verifier
Get the PoRv2 executable from GitHub.
- Get your proofs
Download inclusion_proof_<id>.json and final_proof.json from your Backpack account.
- Run verification
Place all files in the same directory and run:
./plonky2_por verify-inclusion
This confirms:
- Your account was included in the snapshot
- Your exact balances at the proof timestamp
- The cryptographic validity of your inclusion
2. Verify the Entire Exchange Proof
- Download proof files
Get merkle_tree.json and final_proof.json from Backpack’s Proof of Reserves dashboard.
- Run verification
Place the files with the PoRv2 executable and run the same command:./plonky2_por verify-inclusion
This validates:
- Total exchange liabilities
- Asset prices at the snapshot time
- Overall proof integrity
Interested in Seeing the Code?
Everything we’ve built is open source. You can explore it here: github.com/otter-sec/por_v2
What’s Next for Proof of Reserves at Backpack
We’re not stopping at daily proofs. Next up:
- Open Validator Network – External parties will be able to run their own validators and independently verify every transaction.
Conclusion
Don’t take our word for it, see it for yourself. We're just giving you the tools to verify everything. Every hour. Every balance. Every time. Because in crypto, "trust me" should never be good enough. Not anymore. Not after everything we've all been through. Your funds are yours.
Learn more about Backpack
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Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Backpack. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Backpack is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice.
