Vitalik Buterin: Having a safe CEX: proof of solvency and beyond

11/19 11:20

Vitalik Buterin says that using ZK-SNARKs improves privacy and robustness by putting all users' deposits into a Merkle tree and using ZK-SNARKs to prove that all balances in the tree are non-negative, adding up to some claimed value. If we add a layer of hashing for privacy, the Merkle branch provided to each user will not reveal the balances of any other users. For going a step further and not wanting to just prove that the exchange has the funds to repay the user, but more so to prevent the exchange from stealing the user's funds altogether, Vitalik Buterin said the ideal long-term solution would be to rely on self-hosting, supplemented by technologies such as multi-signature and social recovery wallets, to help users deal with emergencies.
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