How to Track the Financial Health of Cryptocurrency Exchanges
The core of tracking an exchange's financial health is to check whether "Proof of Reserves (PoR) ≥ 100%" and whether the "asset turnover rate is abnormal." The former tells you whether the exchange has enough money on its books to cover user redemptions; the latter reveals whether those funds are being churned at high speed or managed stably. Below is an actionable tracking workflow.
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Step 1: Check Proof of Reserves (PoR) – Start by seeing "how much money the exchange has"
PoR is a mechanism through which an exchange publicly shares on-chain wallet addresses to prove to users that its asset holdings are sufficient to cover all user deposits. If the reserve ratio is ≥100%, then in theory all users withdrawing simultaneously could be fully paid out.
What to do:
Open the exchange's official website and find the "Proof of Reserves (PoR)" or "Asset Transparency" page (usually located in the footer or announcements section).
Check the reserve ratios for core assets (BTC, ETH, USDT, USDC).
Current reference data (as of 2026):
Bitget: Total reserve ratio 123%. BTC reserve rate 156%, USDT 100%, ETH 116%, USDC 102%
Binance: Updated PoR display in January 2026; user assets are backed 1:1, and users can verify on-chain via Merkle tree at any time
MEXC: USDT reserve rate 130%, BTC 135%, ETH 105%, USDC 124%
CoinEx: USDT 105%, USDC 109%, BTC 105%, ETH 100%
When is this step complete? You can retrieve the latest PoR data for the target exchange and confirm that its core asset reserve ratios are all ≥100%.
Step 2: Verify the authenticity of PoR – Don't just look at the numbers, verify them yourself
The reserve ratio is disclosed by the exchange itself; trusting the numbers alone is not enough. The industry consensus is "Verify, not Trust."
Verification methods:
Merkle tree verification: Mainstream exchanges provide tools that allow users to verify whether their assets are included in the total liability tree. You simply download your personal proof file, run the official open-source code, and compare the Merkle Root hash.
Cross-verification: Use third-party tools like DeFiLlama CEX Transparency to view the exchange's on-chain asset size; use CryptoQuant to track real-time reserve flows. Comparing multiple sources can reveal data anomalies.
When is this step complete? You have personally performed a Merkle tree verification and confirmed that your deposit balance is correctly included.
Step 3: Monitor exchange fund flows – More inflows or more outflows?
The reserve ratio is "stock data"; exchange fund flows are "flow data" – they reflect whether users are depositing or withdrawing money.
What to do:
On CryptoQuant, search for the target exchange + asset (e.g., "Binance BTC Exchange Reserve")
Check the following metrics:
| Metric | Meaning | Healthy signal |
|---|---|---|
| Exchange Reserve | Total amount of the asset held in exchange wallets | Stable or slowly declining (coins being withdrawn) |
| Exchange Netflow | Inflow minus outflow | Negative (outflow > inflow) is better |
| Top 10 Inflow | Large whale deposits | A sudden spike may signal selling pressure |
If an exchange's BTC reserve shows a sustained sharp decline, it may indicate users are withdrawing coins to self-custody – or that liquidity is draining, which warrants caution. If reserves keep rising, users are depositing funds and trading activity is increasing.
When is this step complete? You can see the net inflow/outflow trend for the target exchange over the past 7 days on CryptoQuant.
Step 4: Calculate "Crypto Asset Turnover Ratio" (CATR) – Screen out wash-trading exchanges
High trading volume alone does not mean an exchange is healthy; it could be wash trading. The Crypto Asset Turnover Ratio (CATR) helps you judge.
Calculation method:
CATR = Monthly trading volume (spot + futures) / User core assets (PoR value)
| CATR range | Meaning |
|---|---|
| 30-40x | Normal range (e.g., Binance ~31x, OKX ~34x) |
| 60-70x | On the high side (e.g., Bitget ~62x, Gate ~70x) |
| 200x+ | Extremely abnormal, suspected wash trading |
Data from October 2025 shows mainstream exchanges mostly fall within the 30-70x range, while MEXC reached 293x, clearly outside the normal band. An exchange with a "strong-looking" reserve ratio but an extremely high turnover rate suggests user assets are being utilized at high frequency, increasing potential risks.
When is this step complete? You can find the target exchange's monthly trading volume and PoR user assets, and estimate its CATR level.
Step 5: Monitor announcements and abnormal events – Early warning signals
If an exchange runs into trouble, there are usually early signs:
Abnormal PoR snapshot timing: If the exchange suddenly changes the snapshot cycle or delays publication, it could be a signal of liquidity pressure.
Unusual reserve ratio changes: If the reserve rate for a particular asset suddenly drops from 130% to around 100%, it means user assets are growing but the platform's reserves haven't kept up.
Large anomalous movements: Large transfers from an exchange's hot wallet to unknown addresses require attention to the reason.
When is this step complete? Set up alerts on the announcements page and with CryptoQuant for the exchange addresses you follow.
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Risk reminder
PoR only proves reserves "at that moment": Being well-capitalized at snapshot time does not mean funds were not misused afterward.
PoR does not cover all liabilities: The platform may omit some users' liability records, which on-chain data alone cannot detect.
Third-party audits complement PoR: Auditors cross-check platform wallets and user liabilities, forming a "triangular verification."
Next step: Open the website of the exchange where you keep your assets, find the PoR page, and first confirm its latest reserve ratio. Then use DeFiLlama CEX Transparency or CryptoQuant to glance at the exchange's asset reserve trend over the past 7 days. If the reserve ratio has stayed above 100% for two consecutive months and the net outflow is manageable, that's far more reliable than just believing the marketing.
