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    Gate.io Blog Haunted by Institution’s Crash, Is Your Capital Fleeting in the Right Direction?

    Haunted by Institution’s Crash, Is Your Capital Fleeting in the Right Direction?

    15 November 22:51



    TL;DR



    • During the period of market contraction in the bear market, risk control must be done more cautiously;

    • The security of asset reserves of major exchanges also needs more attention;

    • Faced with such difficulties, what should we do as users;

    • Keep your assets in the safest place.



    Introduction



    The tsunami ripple of crypto space caused by the bankruptcy of the crypto platform FTX is affecting more people. During the period of market contraction in the bear market, risk control must be done more cautiously. In the bull market, the most profitable method is always to open leverage. But when the liquidity in the bear market is not enough, the group of people who have tasted the sweets are often the first to crash…


    Domino Effect Caused by Crash



    According to CoinDesk, a court document shows that FTX may have more than 1 million potential creditors at present.

    In Taiwan alone, it is estimated that about 500,000 people have been injured. In this regard, Taiwan's financial department said that if personal cryptocurrency investment reported property transaction losses when declaring income tax, it could be reported as a loss and tax deduction according to regulations.

    The balance of cryptocurrency on the centralized exchange (CEX) has fallen to the lowest level since November 2018.

    The FTX crash triggered billions of dollars in capital outflows. During the week from November 6 to November 13, users withdrew $3.7 billion worth of BTC and $2.5 billion worth of ETH. More than $2 billion of stablecoins were also withdrawn from the centralized exchange.

    In addition, according to Nansen's monitoring, the asset reserve security of major exchanges also needs more attention. Recently, several crypto trading platforms have been affected, such as BitCoke and AAX. The "Lehman crisis" caused by FTX has gradually spread to the market. In the face of such difficulties, what should users do?


    What Should Users Do to Avoid the Crash?



    I. Wallet Security

    It is recommended to keep two copies of the same mnemonic phrases in two different places for your digital wallet without the Internet. Wallet mnemonic phrases can record 1-2 words less, use your brain memory to remember the rest or disturb 1-2 orders, and remember the correct order. Or use your own algorithm to convert. Anyway, as long as you can remember part of it, it will be safer. Of course, if you are someone who often forgets things, don't do this.

    In addition, do not enter your own mnemonic phrases anywhere except when creating or importing a wallet. Websites that require mnemonic phrases can basically be considered fraud.

    Import wallet and input mnemonic phrases cannot be copied, pasted, etc. It must be typed manually. Now all kinds of apps can read the clippings, and the private key has basically been disclosed in the process of copying. Don't forget where you put the paper-written mnemonic phrases; this place should also be safe.

    Wallet.io adopts institutional-level, multi-signature and multi-coin wallets. Under the condition of offline security, transfers can be completed only after m-of-n authorization is strictly carried out. The multi-signature scheme also effectively avoids the loss of assets due to the loss of a single private key.

    During the withdrawal operation, there will be at least two kinds of multiple security authentication. The withdrawal can only be performed after the authentication is completely passed. After the password reset and other security settings are changed, users will not be able to withdraw cash within 24 hours. Also, verify your operation intention in the form of SMS or email. This is an additional step to prevent hackers from withdrawing funds by modifying security settings.



    II. On-chain Security

    Every time you click on the link to enter the website, make sure it is an official website. Don't click any link randomly, don't sign the link randomly, and don't authorize it randomly. Don't pay attention to coins and NFTs that are airdropped randomly. If you’re not greedy, you will not be hacked. As a note, regular airdrops generally have formal project parties and official rules.

    When it comes to contract interaction, contact familiar and secure projects. You can roughly go through the contract yourself. Make sure that if the contract is not open-sourced, you don’t participate in it. Even if the contract is open-sourced, make sure to read and check it carefully as there may be pitfalls, and you cannot guarantee 100% security.

    Reduce leverage as much as possible. Keep no leverage, no borrowing or lending, no leveraged investment, and reduce DeFi participation. Check your assets placed on various chains. Withdraw the assets in staking, LP and other investments as soon as they can. Make sure the bridge-crossed assets are all returned to the native chain.

    There will be all kinds of strange problems coming out of the bear market. Remember that protecting your own crypto assets must always come first, and don't be greedy for profits.

    All website data of Gate.io is transmitted through encrypted Transport Layer Security (TLS) connections (HTTPS). It uses Web Application Firewall (WAF) to deal with illegal intrusion, data tampering, and vulnerabilities. When threats are found, the firewall will automatically open.

    The front end of the Gate.io system uses Cloudflare Firewall Enterprise Edition to detect malicious traffic and attacks, and uses CAPTCHA (Completely Automated Public Turing test to tell Computers and Humans Apart) to prevent malware. For DDOS countermeasures, Gate.io continuously improves the anti-DDOS attack mechanism to achieve platform self-evolution through four steps of detection, response, rout, and record.


    III. Exchange Asset Security

    It is not recommended to allocate all the funds in the exchange. Generally, there is less operation in a bear market, so it is not necessary to allocate all the funds in the exchange, especially those without security guarantees and PoR (Proof of Reserves).

    Secondly, select a high-quality and well-known exchange. As an established exchange with a stable operation for 9 years, Gate.io has always been the protector of user asset security. In terms of platform security, account security and asset security, Gate.io is always responsible from the perspective of users and lives up to the trust of every user.

    Then, Google's two-step authentication must be configured. If possible, use two mobile phones simultaneously, one mobile is responsible for exchange and one for Google authentication code, so as to better ensure the security of funds.

    Since the establishment of Gate.io in 2013, capital security and user data security have been the top considerations of the platform. Gate.io adopts a self-developed digital asset trading system, each module iterates independently, and each transaction of the user is protected through a professional company’s thorough testing and annual security audit.



    Conclusion



    Gate.io has been one of the safest exchanges in the world for 9 years. It has provided more than 10 kinds of multiple security schemes for login, trading, cash withdrawal and other operations to achieve all-round active or passive protection.

    In order for users to verify that 100% of their assets are indeed stored in the Gate, Gate.io proposed the scheme of using Merkle tree + third-party audit, and hired an independent virtual currency accounting audit company Armanino LLP, a well-known American audit company, to help with the audit.

    The asset verification model has been applied for by Gate.io in 2020. The PoR audit conducted by the Exchange in this model has become one of the standard steps in the industry to verify asset security. Gate.io's move also provides the industry with a new standard for asset security verification.

    Presently, many institutions and platforms are going through a "stress test". The market liquidity slows down, and the butterfly effect of bear market panic will affect more platforms and institutions. Always remember to put your assets in the safest place. Gate.io will walk beside you through these long days to welcome a better tomorrow.



    Author: Gate.io Researcher Byron B. Translator: Joy Z.

    This article represents only the researcher's views and does not constitute any investment advice.

    Gate.io reserves all rights to this article. Reposting the article will be permitted provided Gate.io is referenced.

    In all other cases, legal action will be taken due to copyright infringement.

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