How Could a Derivatives Exchange Use ZKPs to Verify a Trader Has Sufficient Margin without Knowing Their Total Account Value?
A derivatives exchange could use ZKPs to allow a trader to prove their account meets margin requirements in a privacy-preserving way. The trader would generate a zero-knowledge proof demonstrating that the value of their assets in a specific wallet is greater than the required margin amount.
The exchange's smart contract could verify this proof without ever learning the trader's total account balance or the specific assets held. This allows for solvency verification while maintaining the confidentiality of the trader's full portfolio, which is a significant advantage for large institutional traders.
