That said, a few platforms actually back it up, keeping funds in BTC, USDT, and USDC, ensuring real liquidity. But even then, the question is: Would they actually use it to cover users if something went wrong? Or is it just another bullet point on their marketing deck?
What do you guys think? do protection funds really mean anything, or are they just another tool for exchanges to gain user trust without real accountability
You have answered your own question. They're there to be used to cover those unexpected turn of events that have affected people's funds. A proof of reserve is what they say but they also flaunt it on their websites to gain users trust. We trust exchanges even if they are centralized when they claim that they have enough to cover unexpected system faults or hacking. But even I so, I wouldn't store that many funds in my exchange account, I'll leave some but will be enough only for trading and not for the sole purpose of keeping it there. While some exchanges have proven themselves to be worthy of trust and they were reliable when these events came to them.