🤝Off-Exchange Settlement
Secured asset custody (starting in v3)
Umoja uses multiple Off-Exchange Settlement providers such as Copper and Ceffu. These are three separate, non-US based and owned, well-regarded, and institutionally focused organizations with the sole focus of holding digital assets in custody.
Protocol assets are never held in control or beneficially owned by the "Off-Exchange Settlement" provider at any point.
Management of Risks
Using Off-Exchange Settlement providers with Umoja involves two main risks:
Accessibility and Availability: The ability to deposit, withdraw, and move funds between exchanges is critical. Any disruption in these functions can affect our trading operations and the minting or redeeming of Synths, along with their collateral value. To minimize this risk, Umoja works closely with multiple providers and monitors our partnerships to ensure continuous service.
Operational Performance: In case of exchange failure, our reliance is on the cooperation and legal compliance of our partners to quickly transfer any endangered profits or losses. We safeguard this process by having exchanges provide collateral to these providers, ensuring they can settle on time, typically within a 4-hour cycle. Using several providers for the same exchange further reduces potential risks.
Additional Benefits
OES providers broaden Umoja's access beyond centralized exchanges to include decentralized exchanges and OTC markets seamlessly. This expansion allows Umoja to spread counterparty risk by engaging with a wider array of entities (CeFi Exchanges, DeFi Exchanges, OTC Counterparties). Furthermore, these providers facilitate efficient and cost-effective on-demand minting and redeeming of Synths, eliminating delays or extra costs in moving collateral to or from exchanges.
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