Gate PoSEC shows 104.58% cold-storage coverage for customer assets

Crypto exchange Gate has launched Proof of Security, a disclosure framework showing that cold assets cover customer balances if hot wallets are totally lost. On Nov. 5, the exchange announced a cold-storage coverage ratio of 104.58%, based on a Nov. 4 snapshot taken at 00:00 UTC.

Methodology and Data Sources

The coverage percentage comes from comparing two different data points. Gate compared an 88.26% cold-storage share against an 84.39% user-asset share. The rest of the distribution includes 11.74% in hot wallets and 15.61% owned by the platform.

Cold storage is measured against the sum of cold and hot assets in the storage snapshot. User assets are measured against platform reserves in a separate Proof of Reserves snapshot. Coverage is the cold-storage share divided by the user-asset share. Gate notes that snapshots have different totals and do not reflect intervening fund movements or price changes.

Earlier data adds context. On Oct. 21, Gate reported $8.7 billion in reserves and $7.3 billion in user net assets as of Oct. 18, a reserve ratio of 118.49%. The PoSEC chart does not date its earlier user-asset reference, meaning October dollar totals cannot be combined with November percentages to show a dollar buffer.

Asset Definitions and Verification Status

Gate defines cold storage as digital assets in cold wallets and traditional assets, like stocks and US Treasuries, held by independent custodians. These assets must be verifiable, offline or independently custodied, require multiparty authorization, and sit outside routine operations. Off-chain traditional assets may cause reported cold storage to exceed blockchain wallet balances.

Third-party verification of PoSEC data is in progress as of Nov. 5. The review examines valuation, control, authenticity, reporting scope, and the coverage calculation. Because individual wallet addresses are withheld for security, the pending report is key to public scrutiny.

This framework differs from the audit on Gate’s Proof of Reserves page, which lists a Jan. 3, 2024, Hacken implementation assessment. Hacken’s work focused on architecture, code, vulnerabilities, and build processes. The current verification targets the specific claims of the PoSEC framework.