Proof of Reserves (PoR) is a method used by cryptocurrency exchanges to demonstrate their solvency. It verifies that a platform holds enough assets to cover all user deposits. By providing transparency, it helps build trust between users and the exchange.PoR typically involves a third-party audit. This process confirms that the exchange’s reported reserves match the actual assets held. Users can often verify these claims through cryptographic proofs, ensuring that the exchange can back all its liabilities.This practice is becoming increasingly important, especially after incidents of exchanges facing liquidity crises or insolvency. Users want assurance that their funds are safe and accessible. PoR offers a level of security and peace of mind, fostering confidence in digital asset platforms. In essence, Proof of Reserves is a safeguard for users, promoting transparency and accountability in an industry that can often be opaque.