I'm starting to get bored reading about so-called "exchange reserves". But what is of concern is how the almighty stupids of this world manifest their innate innumeracy with FUD.
Do Crypto Exchange Reserves Rely Too Much on Their Own Tokens?
"Exchange reserves" is meaningless until we separate "client assets" from "exchange assets".
To keep blaming Crypto.com for "holding" some 20% in SHIB is STUPID. They are client assets - blame the clients, if you wish. Altcoins are going to show some big differences in exchange holdings as users gravitate towards the more liquid markets.
I recall when it was quite hard to buy Cosmos tokens such as AKT and KAVA, and even had to open some new accounts. I then discovered that one exchange had extortionate transfer fees, while the other one didn't. Not hard to figure out which one I dumped. But those tokens were my assets held in custody by the exchange - not theirs.
So the bit of data we need, so as to boost confidence in an exchange, is whether customer reserves match customer holdings. That's it. What an exchange holds as its own reserves is another issue. But the problem here is that so many exchanges have not separated their different functions, so that loans, yield pools, self-trading and customer trading all get rolled into one. THAT is the real problem.
Because that opens up the possibility of squirreling away customer assets while pretending they are "fully backed" by an exchange's own internal coin. Now, exchanges often use their own coin to charge fees; that's fine, but those tokens will be held in customer accounts and correctly counted towards client reserves. Such token numbers are going to fluctuate after every trade, but one can still get a snapshot.