Off-Exchange Crypto Settlement with MPC Wallets and Daily Collateral Transfers
Summary
The document explains an off-exchange settlement arrangement linking Deribit with Fireblocks and Coincover. Trading firms hold collateral in a jointly controlled, on-chain multiparty computation wallet, while daily settlement moves assets between that collateral vault and the exchange. This structure is intended to reduce the amount of client collateral held in exchange custody while letting the venue verify collateral and apply risk controls. Open positions remain on Deribit during onboarding; the collateral transfer does not itself close them, and ordinary liquidation rules still apply.
The operational description covers eligibility, agreements, API connections, a collateral signer, settlement thresholds, and recovery if a provider becomes unavailable or the exchange defaults. Only the main account is linked, with settlement aggregated across its subaccounts. These procedures explain the service model rather than evaluate its security or trading performance. The document’s claims about counterparty-risk reduction are presented by the providers; users still depend on contractual terms, wallet controls, service availability, and recovery arrangements.
Key ideas
- Client collateral is held in an MPC wallet and settled with the exchange on a daily basis.
- On-chain collateral visibility is intended to let the exchange monitor backing while reducing custody exposure.
- Existing positions remain open during activation, and standard liquidation rules continue to apply.
- The service requires accounts and agreements with the exchange, wallet provider, and recovery provider.
- Recovery and default procedures depend on the service’s legal agreements and operational arrangements.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.