WOO Network develops live self-reporting dashboard aimed at making crypto exchanges more transparent.
WOO Network is launching a real-time reporting tool for its assets and liabilities to cultivate transparency among its digital assets exchange.
Its transparency dashboard, WOO X, offers live reporting of data that updates every 15 minutes. The dashboard includes evidence of proof of assets and their location.
These features sit aside information on liabilities and additional information related to transparency.
As part of the dashboard’s development, WOO Network analysed other centralised exchanges (CEXs), including WOO X, to identify the transparency features that users are looking for.
According to its findings, a significant proportion of the top 50 CEXs aren’t confident in displaying their books.
Following the epic collapse of FTX, the industry has been searching for a solution that pioneers true transparency. However multiple solutions, including proof of reserves, have fallen short of establishing consumer trust.
To note, proof of reserves is the equivalent of a bank showing how much capital they have, but not showing how much they owe to clients and to others.
Audited records are an important part of the push for greater transparency, but have significant limitations when isolated.
WOO Network claims that the value of the auditors is greater when they can also verify methodologies and identify whether inputs are accurate. Yet many auditors still lack the knowledge to evaluate cryptocurrency exchanges fully.
In formulating the dashboard, Jack Tan, co-founder of WOO Network, describes the exchange’s abilities to aggregate liquidity from top trading venues and provide this liquidity at lower fees. This, Tan says, is being achieved through well-vetted and diversified holdings on other liquidity venues.
“We arrived at this solution by coming up with a wishlist for what we want to see from other exchanges,” he comments.
“So we are holding ourselves to the same standard and being the first to act with this type of radical transparency and live data.
“Our transparency dashboard adds to our goal of making CeFi more transparent than traditional banks and financial institutions,” Tan continues.
Achieving true transparency
In its approach to maximise transparency and timeliness, WOO X adopts various capabilities and uses on-chain proofs wherever applicable.
WOO X offers real-time, verifiable information on assets and liabilities and over-collateralises assets to liabilities to act as a buffer.
Users of the CEX are entitled to the benefits of senior creditors to the extent of applicable laws. Methodologies are externally audited and verified, while conservative and diversified holdings on liquidity venues, such as Binance and OKX, are also on the table. It emphasises DeFi and non-custodial trading as fundamental to counterparty risk.
“The practice of using market-makers and other venues to enhance liquidity is widely used but has never been particularly transparent until now,” Tan continues.
“From job postings for internal market-makers by CEXes to the fine contract print enabling the rehypothecation of client assets on Wall Street, this is a trend of opacity that originated in traditional finance and has crossed over into crypto.
“Going forward, users need to know how much risk is taken with their assets and which venues are being used.”
On top of the live dashboard, Tan explains how WOO Network’s terms of service entitle users to the benefits of the senior creditors. However, the extent acceptable under the law limits this. This legality is crucial for determining the safety and retrieval of users’ funds in the worst-case scenario.
WOO Network is implementing a merkle tree proof to verify that users’ assets are accounted for in liability calculations.
Merkle trees allow users to verify the inclusion of their balances in the complete snapshot of liabilities cryptographically.
Moreover, WOO Network aims to complete an independent third-party audit to verify the accuracy of reported data.
Centralised exchanges and transparency
As previously mentioned, there appears to be a reluctance among the top exchanges to display their books.
This remains unusual given that crypto holders have made their preference for up-to-date information regarding assets and liabilities clear.
Out of the 51 exchanges surveyed by WOO Network, only 18 have publically available proof of reserves statements. A proportion of that 18 openly discusses their proof of reserves. Furthermore, an even smaller proportion post the information directly to social pages.
Likewise, only five exchanges are providing live data, including Kraken, Korbit and Phemex, and updating said data throughout the day.
Out of 18 exchanges that have shown their proof of reserves, seven have also displayed their liabilities, including WOO X.